Fred started his new landscaping business with a commercial loan. He uses his credit card to pay for weekly supplies such as fertilizer and mulch. Business growth has been slow and Fred is having a difficult time keeping up with his monthly loan and credit card payments. He is now considering borrowing against his home to stay current with his initial loan and for other needed expenses. Fred's business is MOST at risk because ________.

Question

Quizplus · Accepted Answer

Fred's business is at risk because he is taking on too much debt. Taking on additional debt to pay off previous debts is not a sustainable business strategy, especially if the business is growing slowly and not generating enough revenue. This can lead to Fred being unable to make loan or credit card payments, possibly resulting in default or bankruptcy.

Fred Started His New Landscaping Business with a Commercial Loan