What does leverage mean?
Leverage describes the power or advantage that comes from using an existing resource more effectively. In its most general sense, it refers to exploiting knowledge, skills, relationships, technology, or a favorable position to accomplish more than would otherwise be possible. The word also has a specific financial meaning: using borrowed funds to increase the potential return on an investment, though it can equally describe the use of nonfinancial assets and expertise. In business and political language, “leverage” may suggest turning influence or a strategic position into a practical result. It is often slightly more formal and strategic than simpler words such as “use” or “benefit,” and in finance it can carry implications of risk because borrowing magnifies both gains and losses. Overall, leverage is a useful term for describing how an existing strength can produce a disproportionately larger effect.
The advantage, power, or useful position gained from an existing resource, relationship, or ability.
"The company had the leverage of a large customer base when negotiating with suppliers."
Common in business, politics, finance, and negotiations. In finance, it can specifically mean the use of borrowed money to increase investment potential.
To use an existing resource, advantage, skill, or relationship to achieve a more effective result.
"Small teams can leverage shared tools to build products more quickly."
Usually implies strategic or effective use of something already available rather than creating the resource from nothing.
The plural is used for distinct advantages or instances of leverage, especially in business and financial contexts.
"The company found several ways to leverage its expertise."
Leverage began with the idea of a lever: a tool that multiplies the force of a small effort, and later came to mean multiplying any useful advantage you already possess.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does leverage come from?
The word comes through French levier, an earlier form related to the action of a lever, from Latin levare, “to raise or lift.” English borrowed the term in the 16th century for a mechanical device and later developed the figurative sense of using one thing or person to exert greater force or obtain greater advantage. It is related to Latin-derived words such as elevate and, more distantly, levy.
Related word forms
How leverage is actually used
The noun and verb are common in business, finance, politics, and general professional contexts. The expression often implies making the most of an existing strength, while in finance it more specifically refers to using debt to increase investment returns.