Over borrowing carries several risks that can jeopardize the success of a business:
1. High Interest Payments: Excessive borrowing leads to high interest costs, which can strain cash flow and reduce the funds available for operational expenses. 2. Debt Dependency: Relying heavily on borrowed funds can make a business overly dependent on external financing, reducing its financial stability. 3. Credit Rating Impact: Over borrowing can negatively impact a business's credit rating, making it more difficult and expensive to secure future financing. 4. Bankruptcy Risk: If a business cannot service its debt, it may face insolvency or bankruptcy, leading to the potential loss of the business.