On August 2, 2011, President Barack Obama signed into law the Budget Control Act of 2011 in order to raise the U.S. debt ceiling. Proponents of raising the debt ceiling say that this kind of debt is "good". It is the "safe" thing to do. They have argued that this step was necessary in order to prevent a possible government default. They contended that in order for the Federal Government to continue to pay its obligations, it needed to borrow more money and the debt ceiling needed to be raised. Opponents to raising the debt ceiling say this kind of debt is "bad". It is a "dangerous" thing to do. They have argued that the U.S. debt is already too high and instead of raising the debt ceiling, elected officials should find ways to lower the debt and to cut Federal spending.  

Can the argument of good debt versus bad debt be also made for business?

Why should a business owner even borrow in the first place?  Why not just wait for the money to come in from customers? That might be a good idea but cash from customers does not always arrive when it is needed. Additionally, there are times when a business owner can take advantage of an opportunity. Let's say you have a customer that wants to give you a very large contract. In order to start work, you need to purchase materials, buy equipment, hire new employees, or all three. You don't have all the funds to start. Do you just let this opportunity slip by or do you get a loan?

What if you don't have an opportunity like this and business is just down? Cash flow is thin, funds are lean, and you have bills to pay.

Any business owner that has needed to make payroll or pay an essential supplier or pay taxes but was short on funds knows this experience all too well -- perhaps painfully. If this continues, the company is either in serious trouble or is headed that way.

A business owner in this situation cannot rely on an Act of Congress to get help. There are several reasons why cash needs exceed available cash and these reasons should be explored by company management. The business owner may also need the outside help of a seasoned financial professional, someone to help get the business going in the right direction, someone like a B2B CFO^® .