Small business owners often face a delicate balancing act when it comes to managing their finances and assets. One crucial aspect of this financial juggling act is the use of leverage, particularly concerning owner-occupied buildings, investment properties, and equipment finance purchases. While leverage can be a powerful tool for growth, it is essential for small business owners to approach it reasonably.

Small business owners need a stable financial foundation to weather economic uncertainties. Conservative leverage ensures that they do not overextend themselves, reducing the risk of bankruptcy or financial instability during challenging times. By avoiding excessive debt, owners can maintain their financial security and protect their businesses.

In terms of a commercial mortgage, the real estate market can be unpredictable, and property values may fluctuate. When small business owners use moderate leverage, they reduce the risk associated with property investments. A lower loan-to-value ratio means they have more equity in their properties, providing a cushion against potential market downturns.

A modest approach to leverage does not mean avoiding loans altogether; it means borrowing wisely. By managing debt responsibly, small business owners can facilitate steady and sustainable growth. They can invest in new equipment, purchase owner-occupied properties, expand their business operations, or acquire additional investment properties without exposing themselves to undue risk.

If you are not overburdened with debt, you are likely to maintain a good credit score, which is vital for small business owners. It allows them to access financing options when needed and secure favorable terms. Accessing the right loan protects their creditworthiness by preventing excessive debt levels that could lead to missed payments or defaults while maintaining a healthy level of liquidity. This means they have cash available for emergencies, opportunities, or unexpected expenses. It also provides flexibility to adapt to changing market conditions or business needs without being tied down by excessive debt obligations.

In the world of small business ownership, it is important to have a strategic approach to leverage that helps maintain financial stability, reduce risk, and foster long-term growth. By applying this principle, entrepreneurs can ensure their businesses thrive even in uncertain economic environments. While the allure of rapid expansion may be tempting, the prudent use of leverage remains a cornerstone of financial success for small business owners.

At Apex Commercial Capital we believe in certainty of execution. We do not offer high leveraged deals to win a deal, and then ultimately re-trade our customers. In the pursuit of long-term success, it is paramount for your small business to secure the right loan. Choosing a loan that aligns with your financial goals and capacity can be the linchpin for maintaining viability and growth. By carefully considering your business's unique needs and selecting a loan that suits them, you not only ensure stability but also create a solid foundation for future success. It is an investment in the resilience and prosperity of your business for years to come.

Don’t wait to think about your potential need for financing, use your plan to think ahead. At Apex Commercial Capital we go beyond the numbers to help your business succeed. With more than 30 years of proven financing solutions for commercial real estate and equipment financing, and the experience to navigate constantly changing markets, Apex Commercial Capital understands your unique situation.

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Andrew Tauber is the President of Apex Commercial Capital and Executive Vice President, Managing Director of Firstrust Bank Lending Subsidiaries.

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