BankKeeping

  Small businesses , like their larger counterparts, often rely on external funding to fuel growth and expansion. Business loans can be powerful tools to unlock new opportunities—but when not managed wisely, debt can become a serious threat. In this article, we explore what it means to be overleveraged , the risks involved, and how to strategically manage business debt.   What Does "Overleveraged" Mean in Business? A business is considered overleveraged when it carries more debt than it can reasonably repay through its operations, cash flow, or assets. Too much loan. Excessive borrowing strains cash flows, reduces profitability, and increases the risk of default or bankruptcy . This often leads to a debt spiral—where the business takes on new loans to service existing debt—eventually collapsing under financial pressure if not corrected in time.   Common Causes of Overleveraging Understanding why businesses become overleveraged is the first step toward preve...