One of these things is not like the others. And that would be debt.

While there are good reasons to be scared of the fictional folks mentioned in the headline, debt isn't nearly as scary as it seems.

Yes, debt can be crippling - and the media loves to play up horror stories of both companies and individuals whose lives were ruined by it - but debt also is a tool needed to grow your company.

Unless you have a sugar daddy bankrolling you from the start, win the Powerball lottery or are that one-in-a-million company where literally everything goes right from day one, you're going to need capital at some point. Remember, you need to spend money to make money. Even the guy playing guitar on the street knows that, which is why he seeds his instrument case with a few bucks.

Still not convinced? Well, ask yourself how many Fortune 500 companies are debt free.

As of May 22, there were just 12, according to retirebeforedad.com. While there are some big names on the list (Facebook being the biggest), it means there are many more that are holding at least some debt. Sure, some of those companies may be in financial trouble, but it's fair to say many more are in excellent shape and effectively using debt as a growth tool.

Think about how debt can help you.

What if you have a chance to buy raw materials at a rock-bottom price?

Would buying new equipment increase efficiencies and/or capacity?

Could hiring a new executive team put you over on your biggest competitor?

Would a larger headquarters and/or some key branch offices help your cause?

How might a marketing/advertising/public relations campaign impact business?

Without capital, you might not be able to do any of those or dozens of other things that could help your business venture. And that could mean a struggle to grow.

Here's another way to look at debt. Ask yourself three questions.

First, what bad could happen by taking on debt? Next, what good can happen by taking on debt? Finally, what is the middle result?

Then focus on the last question because that's the most probable scenario. It's unlikely that your company will come crashing down because of debt. Simultaneously, it's unlikely everything pans out exactly as expected and you become the next Marc Zuckerberg.

Also note, that are ways to protect yourself when it comes to debt, most of which come down to due diligence. Don't jump on the first loan opportunity that you receive. Take your time to review options and really work on the repayment scenarios.

You've heard me say it before, and I'll keep saying it to the day I retire: Your starting point should be a Small Business Administration-backed (SBA) loan, which offers a great combination of low interest rates and generous repayment terms. Many businesses wrongly assume they are ineligible for an SBA loan, so take the time to find out if you qualify.

If you don't qualify, there are other lending options, some more desirable than others.

There are plenty of reputable non-SBA lenders out there who can offer reasonable loans and terms. Do be wary, however, of so-called online lenders, which offer quick and easy approvals; those repayment terms often can be onerous, especially on short-term loans.

And, as a last resort, remember that you're not obligated to take out a loan. Perhaps holding on to the status quo for six months or a year or two will be the best bet, especially if you put yourself in a position to land a desirable loan later on.

Published on: Jun 13, 2018