85541845-11E9-4F22-B718-9FE855A6FBBB

How to harness liabilities to generate money | 2022

We like to start our teachings with the basics, so let’s get to understand what liabilities are. Liabilities are essentially what you owe other parties. Unlike assets, liabilities take money out of the pocket! 

Examples of liabilities are:

  • Bank debt
  • Mortgage debt
  • Money owed to suppliers (accounts payable)
  • Wages owed
  • Taxes owed


Liabilities are known to decrease a company’s value and equity. But in this blog, we’re going to look at things with a different eye. Debt is a word that many people are afraid of. We’ve also seen some shows and all types of reads specifically teaching people to get out of debt. Although, we don’t believe debt can only be seen as a negative measure. Let’s show you how…

You really need to be strategic about it and make sure your potential gains are high. The general rule of thumb here is to make sure your gains are much more than your debt. 

Have you ever heard anyone say “the rich use credit to make money? It’s actually very true. Take the property business for instance: agents may take up a loan to buy property in a good area, either renovate it and sell it, or rent it out. Either way, they get to make good gains. Let’s take a look at some other examples you can implement in your business: 

Assets financing – ideal for business owners looking for funding specifically to purchase physical equipment. 

If you are looking at expanding your offerings or growing your business by getting better production equipment etc, this could be a good investment for your business. 

Commercial real estate loans – best for business owners looking to finance purchasing new or existing commercial property or renovating commercial space

Do a good research about the area you are thinking of locating your business, considering the demographics, activities in the area, and things as such. Also, search about the property value. Should you think of relocating your business, you will at least make a good profit from that 

Microloans – ideal for new or established businesses looking for a small amount of capital. For established businesses, this money can be thrown in things like marketing campaigns and ADS. Things like data mining and interpretation can help you make better decisions in these instances, ensuring that you take a calculated risk with the loan. 

Five tips to help you manage your debt well;

  1. Pay the amount due, or more, on time – when it is due.
  2. Know what admin fees and other charges apply, and when they must be paid.
  3. Know the interest rate you are charged, as well as if and when it can change.
  4. Make sure you can afford the repayments if interest rates rise.
  5. Talk to your creditors if you run into financial difficulty.



The word we’re leaving you with is, debt requires you to be disciplined. If you miss payments or pay later than the agreed time, you might face penalties or other obligations. 

Is Debt good for your business?

Debt is not necessarily a bad thing, you can use it strategically for your financial needs. If you are going to throw it in a marketing campaign, or perhaps renting property at a better location for your company to position your business for growth, always make sure the ROI (Return Of Investment) is greater than the debt.

Therefore, you will need to consider a few things before taking a loan: your business’s finances, your reason for the loan, etc before narrowing down your options.

Can business debt affect your personal credit score?

NB: Business Debt Can Affect Your Credit.
Even though your business finances are separate from your personal finances, the two can easily intertwine, which you cannot control.

Business debt will affect your personal credit score, especially when you are a sole proprietor. If you are a sole proprietor, you are the business—whatever you do personally reflects on your business, and vise versa. So, be discipline.

There are different types of loans, let’s explore these 5 common loans for small businesses:

1️⃣ Assets financing – ideal for business owners looking for funding specifically to purchase physical equipment

2️⃣ Invoice financing – for business owners with unpaid invoices who need an advance of capital to cover cash flow or other short-term financing needs

3️⃣ Commercial real estate loans – best for business owners looking to finance purchasing new or existing commercial property or renovating commercial space

4️⃣ Microloans – ideal for new or established businesses looking for a small amount of capital

5️⃣ Personal loans for business use – for newer businesses who are just starting out and need access to affordable financing

Can you take debt to your advantage?

Here are at least 2 ways to use debt to your advantage:

1️⃣ The ROI should be greater than the debt.

This takes us back to the examples we talked of earlier about marketing campaigns, rental of property, etc. It’s like taking a calculated risk. Although we can never be sure of outcomes as we rely on predictions, things like data mining and interpretation can help you take better decisions.

For instance, you can make good research about the area you are thinking of locating your business, considering the demographics, activities in the area and things as such. Also search about the property value. Should you think of relocating your business, you will at least make good profit from that – which you can also use for other parts of your business, or just throw it in your savings.

2️⃣ Don’t sell your equity.

Every business has lean time, it’s inevitable…but when that time comes, don’t sell your equity by adding more partners to, rather take a loan. Paying off debt is much easier than ending a partnership, it can get messy.

In a nutshell…

Debt is not the devil, but you MUST be discipline. First educate yourself and understand what you are getting yourself into. Debt can be expensive, set priorities and goals. Use the money wisely.