Definition

Owing money for funds taken to run or grow the business. Managing debt well keeps the company financially healthy.

What to consider

  • Keep track of credit limits and usage.
  • Monitor interest rates on borrowed funds.
  • Use credit lines sparingly to avoid high debt.

Real world scenarios

  • A retailer uses a revolving credit line to cover short-term cash flow gaps.
  • An entrepreneur accesses funds quickly during unexpected expenses.
  • A service provider maintains a credit line as a backup for operational needs.

Related terms

Entrepreneurial Finances