What is a major pro of using debt in financing?

Using debt in financing is advantageous primarily because interest payments are tax-deductible. This means that the cost of borrowing is effectively reduced, as businesses can deduct the interest from their taxable income, lowering their overall tax liability. This tax benefit can improve cash flow, allowing companies to reinvest in operations, pay off other debts, or distribute profits to shareholders.

In contrast, while some might consider the prolonged use of debt to carry risks related to increased financial obligations, the tax deductibility of interest can mitigate this concern. Regular payments on debt are indeed an obligation, so that aspect would not be an advantage of using debt. Furthermore, using debt does not eliminate market competition; it might even intensify the competition as more businesses seek to leverage borrowed capital for growth.