Arnon Dror – 2 Key Reasons Why Entrepreneurs Should Use Debt Capital To Raise Funds

Arnon Dror is a role model for many aspiring professionals who excel in international finance. Almost all of his contemporaries can’t claim to match his level of achievement. This masters graduate in business administration has over 20 years of valuable experience under this belt. During this tenure, Arnon Dror has been able to occupy many senior positions in a number of organizations. The most important being the office of Vice-President (Finance). The officials of Xerox, Scitex, Creo Inc., Kodak, Creo Americas and Presstek are grateful to him. This regards him as the architect who converts their loss-making organizations into lucrative entities. They acknowledge he has a flair for corporate reconstruction. However, they are quick to admit his expertise covers many diverse fields. These include business mergers, cash flow management, internal controls, financial planning, international taxation and ERP integration.

Arnon Dror – Is it worthwhile for entrepreneurs to use debt capital to finance their businesses?

This financial expert says entrepreneurs need to raise money from the market to fund their businesses. Otherwise, they aren’t in a position to carry out their activities in this environment. They can opt for bootstrapping to make ends meet. It involves using their own savings and collecting the necessary cash from the people they know. However, the resources they obtain isn’t always enough to turn their dreams into reality. They need to look for other suitable sources. This is the reason why they should seriously consider using for debt capital. He points out the following 2 important reasons for taking this course of action:

Retain absolute control and ownership of their organizations

Individuals take up entrepreneurship to earn their livelihood for one important reason. They want to operate their own businesses as bosses rather than takes orders from other people. They are the ones who take all the important decisions on conducting their concern’s commercial activities. Opting to use debt capital to finance their establishments helps them to achieve this objective. Taking this step has an important advantage. These proprietors don’t have to devolve the ownership and control of their organization to any other person. It’s a far cry from issuing equity share to the general public. This is a fact which they can’t afford to overlook at any costs.

Attractive tax deductions

This is another important factor for the popularity of debt financing among entrepreneurs. Almost all of them have to pay tax on the profits they earn from their businesses. For this, they have to file returns with the regulatory authorities as proof of such income. These proprietors can declare the principal repayments and interest charges of their loans as legitimate expenses. On such amounts they claim all the necessary deductions. This is not possible if they choose to raise the money they need by issuing equity shares. This is something these businessmen can’t ignore.

Arnon Dror says using debt capital to finance their businesses can work wonders for entrepreneurs. They can raise the funds they need without having to forgo control of their businesses. The above 2 important reasons to take this step proves this fact beyond any doubt. They won’t regret taking the decision.

Kevin Kholi

Learn More →