In business, leverage refers to how a company acquires new assets for startup or expansion. Businesses can also use leverage through equity by raising money from investors.
How Leverage Works
Most small businesses don't have sufficient cash to cover all these expenditures, so the retailer applies for a business loan, allowing the company to do what it couldn't do without the additional funds.
The assets of the company being bought are used as collateral for the loans by the buyer. A leveraged buyout is the purchase of a business using borrowed money.