1123 – Tips To Do This Right: Tom talks How To Borrow Money

SUMMARY BY CHATGPT

In this episode, Tom Antion discusses the advantages and risks of borrowing money for business purposes. His central message is that debt itself is neither good nor bad—what matters is how and why it is used.
Key Points
Advantages of Borrowing Money
1. Move Faster Than Competitors
• Borrowed funds allow a business to purchase equipment, inventory, vehicles, or other assets immediately.
• Speed can help capture opportunities before competitors do.
2. Preserve Cash Reserves
• Keeping cash on hand provides protection during slow periods or unexpected setbacks.
• Tom shares an example where delays in receiving pizza ovens could have ruined his business if he had not maintained cash reserves.
3. Smart Debt Can Generate Long-Term Income
• Borrowing to buy productive assets (e.g., laundromat equipment) can continue generating revenue long after the loan is paid off.
4. Tax Benefits
• Certain business purchases may provide significant tax deductions or depreciation benefits.
• He emphasizes consulting a qualified tax professional before making decisions.
5. Inflation Works in Your Favor
• Fixed-rate debt is repaid with future dollars that may be worth less due to inflation.
6. Builds Business Credit
• Responsible borrowing helps establish credit history.
• Strong business credit can provide access to lines of credit and future financing opportunities.
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Disadvantages of Borrowing Money
1. Payments Must Be Made Regardless of Business Conditions
• Loan payments continue even when revenue declines.
• Interest-only loans may keep payments low but do not reduce principal.
2. Excessive Debt Leads to Poor Decisions
• Businesses under financial pressure may:
o Accept unprofitable clients
o Offer panic discounts
o Engage in questionable marketing tactics
3. Ego Debt
• Borrowing to appear successful is dangerous.
• Examples include:
o Luxury offices
o Expensive vehicles
o Designer clothing
o Lavish business appearances
4. Debt Cannot Fix a Bad Business Model
• Borrowing money to sustain an unprofitable business often only delays failure.
5. Variable Interest Rate Risk
• Rising interest rates can dramatically increase payments and create cash-flow problems.
6. Personal Guarantees
• Many business loans require the owner to personally guarantee repayment.
• If the business fails, personal assets such as homes, vehicles, and savings may be at risk.
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Smart Debt vs. Dumb Debt
Smart Debt
Debt that creates value, income, or efficiency:
• Marketing campaigns with a proven return on investment (ROI)
• Equipment that increases productivity
• Assets that generate recurring income
• Purchasing an established profitable business (after proper due diligence)
Dumb Debt
Debt that primarily serves appearance or status:
• Luxury offices
• Expensive cars, boats, and aircraft
• Designer clothing and accessories
• Conferences where nothing learned is implemented
• Excessive staffing before revenue supports it
Tom shares a personal example of nearly purchasing a business jet but deciding against it after learning the true costs of insurance, pilots, maintenance, and operations.
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Main Takeaway
The episode argues that debt should be used as a tool to acquire assets or opportunities that produce income, increase productivity, or create long-term value. Borrowing primarily to impress others, maintain appearances, or support a failing business is likely to create financial problems.
Practical Lessons for Small Business Owners
• Maintain cash reserves even when borrowing.
• Prefer fixed-rate debt when possible.
• Avoid personal guarantees unless you fully understand the risk.
• Borrow for assets that generate revenue or improve efficiency.
• Avoid borrowing for status symbols.
• Ensure any major borrowing decision is reviewed by a qualified accountant or financial advisor.
• Focus on lean operations before adding employees or overhead.
Bottom line: Borrow money only when there is a clear, measurable path to producing more income than the debt costs. Debt used to create value can accelerate growth; debt used for appearances can become a burden.

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Episode 1123 – How To Borrow Money
[00:00:08] Welcome to Screw the Commute. The entrepreneurial podcast dedicated to getting you out of the car and into the money, with your host, lifelong entrepreneur and multimillionaire, Tom Antion.
[00:00:22] Hey everybody, it's Tom here with episode 1123 of Screw the Commute podcast. Let's see. Today we're going to talk about, this is all going to be a money week this week, how to borrow money, what you should do, what you shouldn't do, etc. okay, hope you missed episode 1122 that was choosing a tax pro, and 1121 was the big 2026 tax benefits you can get for buying stuff for your business. So all this week is money stuff. All right, pick up a copy of my automation book at screwthecommute.com/automatefree. Version 3.0 is the latest. And in the book you will see me talk about short keys, something I've been really bragging about for years that I've used for many years. Save me millions of keystrokes. And it's no longer a program. It's a browser extension. So just keep that in mind. Anytime you want to get to a back episode, you go to screwthecommute.com, slash, then the episode number. Today is 1123. Choosing a tax pro is 1122. And business deductions for 2026 is 1121. And if you want to get that automation book, that's screwthecommute.com/automatefree. And of course, I want you to check out my mentor program at greatinternetmarketingtraining.com and my school at IMTCVA.org, certified to operate by SCHEV.
[00:01:57] All right. Let's talk about the pros of borrowing money. We'll get into the cons and then we'll talk about smart debt and dumb debt. Okay. Well, on the pros you can do things very quickly. If you have money, you can beat your competitors and maybe you need that new truck, or you need to jump on some new thing and build up your inventory or whatever. So the speed that you can do it can put you in front of your competitors and you get the business and the money pays pays off that way. Now, one thing we call smart debt is something that you go into debt to buy that pays off long after the debt is paid off. Let's say, I don't know. Let's say you're in a laundromat and you bought new washers and dryers. Well, those things, even after you pay the loan off, are going to last for many years. I mean, you certainly have to maintain them, but they'll pay off way after the debt is paid off. So that's a smart debt now. Tax advantages. Like I said, listen to episode 1121 for 2026 on all the great. I mean, these are crazy great advantages we never had before in business, uh, especially if you're buying equipment and so forth. So check that out. And again, I gotta say, I'm not giving accounting advice. I'm not qualified to do so, but your accountant is. And so you should check the ideas that I'm giving you with your accountant to see how it applies to you. Now, another interesting thing on a debt that is paid off on a fixed. Let's say you have a fixed payment for so long.
[00:03:41] Well, when with inflation, you're paying off the debt in cheaper dollars as you go down the road to pay it off. See. So that can be a big pro for you. Also another really important one. It preserves your cash. See, you could have a. If you paid all cash for everything, which I do now, because I can. But in the beginning, if you had one bad month, it could wipe you out and you're done. And I'll tell you what. Let me. I just reminded me of something when I first started my nightclub, way back in the day with a pizza shop and the pizza ovens, I gave a big deposit to the guy for the pizza ovens. And they didn't come in and he, he kind of sat on it. He was having cash flow problems, and the ovens didn't even come in to be installed for two months. Those two months, I was supposed to be open making pizzas and bringing in revenue. And luckily I had big cash reserves because I, I paid attention to the businesses I was in before and built up cash reserves so that that bad month didn't kill me. So one of the pros of debt is it preserves your cash so you can get through bad months, and it buys you time to get to the good months, which is exactly what happened to me when I had the nightclub and the pizza shop.
[00:05:10] And it builds your business credit so that you can jump on opportunities quickly, because you've got a good credit history built up and you can get cash advances and, and, um, what's it called? Lines of credit. Like I have lines of credit that I could just grab enormous amounts of money really quick if I wanted to. And I don't use them if I don't need to. And, you know, as frugal as I am and growing up with a dad that came on a cattle boat from Syria and very frugal, I'm very careful on how I spend my money and, and even though I don't have to be, and I do, yeah, I splurge and I'm not a cheapskate, but I'm careful. And I watch them and see if somebody's trying to rip me off because they think, oh, let's get the rich guy, you know? So those are some of the pros of business debt. Now some of the cons, hey, you got to make the payments, okay? Those payments are going to come whether you like it or not. Even if you get what's called an interest only loan to keep the payments low. But you're never reducing the principal of the loan. And, you know, so it goes on forever if you're only doing interest only. So you want to get that thing paid off. Now, too much debt can mean that you make bad decisions.
[00:06:31] So you might take a client that you know sucks and you might lose money on the client just to get some cash flow in to pay your debt. You might put, you know, deals out there with panic discounts to just get some money coming in. You might start doing, you know, be pressured into scammy marketing to get money coming in. So that's with too much debt that's not paying off. Then ego debt is a con. That's where you fancy office and fancy signages and fancy trucks and everything is to make you look like you're successful even. And I've seen this so much, especially in the speaking industry, these people on stage, you know, play in the big diva and, you know, and big shot and I know behind the scenes because I've been around so long, they're struggling, you know, but they're putting on a good show to try to get money out of you, you know, so you don't want to be in that position. That's ego debt. And another thing is if you're hiding a bad business model, if the business model sucks, the debt that you take on to keep it afloat just delays your funeral. Okay. The funeral of the business. So so that's a con of covering, you know, using borrowed money to cover up a bad business. All right. You don't want that to be in that position. And another thing that will kill you is if you agree to a loan that has variable interest rates, because an interest rate spike can make your payment go out of sight where you can't afford it.
[00:08:13] So you got to be careful with those kinds of things. And one of the biggest potential downsides is personal guarantees. That means that, yeah, you're borrowing the money for your business, but they want you to guarantee the loan personally. And so that means if, if you can't make the payment, they're going to take your house or your car or your trucks or, you know, whatever you got, uh, they're going to come after it, say so. So those are some of the cons. Now, I don't want to scare you out of it, but, you know, I'm a big fan of getting a computer and learning as much as you can and getting some help from me. And, you know, I don't know. I was going to say people like me, but not too many of them out there. And, uh, and, you know, you get into a high profit business like, you know, 97% profit selling digital stuff. See? So, so it's much less risky for you. Okay, so let's talk about smart debt and dumb debt. All right. So smart debt would be something, let's say you're, you're doing a marketing campaign that has a proven ROI or return on investment. In other words, it's pretty darn sure you've tested and, and been proven that if you spend a dollar, you're going to get $3 back or something like that.
[00:09:32] And, and you've got to be careful of the scams that allow you to get an ROI when you're spending a couple dollars a day. But then when you go up to 5000 or $1000 a day, It tanks because they're just showing your ad to any kind of homeless person on the street, and it doesn't pay off. So you got to be careful that really know what you're doing there, and you have to be smart about it. That's what's called smart debt. Uh, smart debt is also equipment that increases your production and productivity. Yeah. That that's a smart debt that you could go into. Smart debt is assets that generate recurring income. I gave the example of the, you know, laundromat stuff that it's going to long after the debt is paid off. It's keeping those quarters and dollars coming in. All right. So that's what you want. Uh, another smart thing is to buy an existing profitable business. But again, you have to be savvy because people can what they call cook the books and make it look profitable. So you have to really be careful. But you know, there are businesses out there that are profitable, that people are just they get sick, they get tired. They just want to move on to something else. They want to cash in for what they've created.
[00:10:55] And if it's profitable and makes sense for you, of course you should have, you know, all your accountant and all your financial advisors look at all the stuff to make sure it's reasonable, but that can be a good, smart debt to buy a profitable business. All right. Now, dumb debt that's trying to look successful. That's the dumbest debt you can get by buying $6,000 suits and fancy purses and, and shoes and, and, uh, what else? The luxury office space that's costing you a fortune $150 a square foot or something. You know, uh, those are all dumb debts, uh, attending conferences, spending a fortune to go out there and look good and bring your entourage with you, but not implement things that you learned or follow up with people that you meet to make it pay off. Okay. And fancy cars and fancy planes and boats and all these things are just dumb debt. You know, I in fact, years ago, I was going to buy a Cessna citation for $2 million. And thank God the insurance guy sobered me up saying, okay, you know, because I'm a charter pilot, have lots of hours, but not in jets. And so he says, okay, no problem. You know, you have to fly with a cat for us to insure you. You have to fly with a captain for a year. That's about $75,000 for a captain that's, you know, type rated.
[00:12:34] And the jet that you want to buy, you got to pay for the jet. And there was something else, and you got to get 500 hours, you know of right seat time and I forget it was just, it was like, uh, and and the insurance on the, uh, the plane alone was going to be like $8,000 a month, not counting the payment. Okay. So I was like, oh, maybe this isn't the best idea for me to get a citation jet or any kind of jet. I think they're down to $1 million now for a single engine, uh, you know, four place jet right now. But but, uh, the thing is, is, you know, they talked me out of it, and I'm glad they did, because that would have been dumb debt. All right. I didn't need. Yeah, I was traveling all over the place. But when you add fuel and maintenance and a whole bit, it would it would not have paid off even as big a money I was making when I was speaking regularly and all that stuff. And the other thing is excess employees having too many people working for you and getting lazy. So you're not doing anything and you're just, you know, delegating everything. But they're the them and payroll taxes and everything is eating you alive before you've proven revenue or there's plenty enough revenue to afford doing something like that. See, so I started by myself years ago and I got to, I think it was 1.2 million a year with one part time temp person.
[00:14:06] And then once I started really cranking money, I started hiring people. I had as many as ten one at one time. But now we're down to a very, you know, couple employees and some contractors and, and lean and mean, say so. So having too many people just to make yourself look good, crazy, dumb debt. All right. So that's a little bit about, uh, borrowing money and, uh, what it can do for you, what it can, how it can hurt you. And again, you always need to on any significant thing like this. Talk to your tax advisor. A legitimate tax advisor, which I talk about in these other episodes, and somebody that's licensed and professional and experienced in your industry and in your, um, you know, your, the type of industry, at least, you know, if you're in manufacturing, you know, and they're in online, you know, Shopify, then that's not the right person. Right? So, um, so anyway, uh, money can help you. Money can hurt you. It's just money. Okay. So, there we go. So check out my mentor program. Greatinternetmarketingtraining.com and my school at IMTCVA.org, certified to operate by SCHEV, State Council on Higher Education in Virginia. But you don't have to be in Virginia because it's quality distance learning. All right. We'll catch you on the next episode. See you later.