Inject your company with a cash transfusion

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in Small Business Tax,Small Business Tax Deduction Strategies

How can you give your struggling company a shot in the arm to generate a much-needed growth spurt? It takes money to make money, but things often aren’t that simple. Whether you own a C corporation or an S corporation, there are essentially two ways to pump additional funding into your company: debt or equity.

How to increase corporate debt

As a general rule, borrowing from a bank is a “temporary arrangement.” When you pay off the loan, the deal is done. So, unless you run into financial difficulties, the lender has little or no control over how you run your business.

The amount that you’re able to borrow for your company will depend on several factors, including your personal and corporate credit history, creditworthiness and intended use of the funds. In general, figure on this rule of thumb: The bank will hold the line at about a 4-to-1 debt-to-equity ratio. For instance, if you have $1 million in equity in the company, t...(register to read more)

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