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Corporate Loans
A trustworthy financing decision has to allow "not now" and "not at all" as answers.
Deciding not to borrow can be the right commercial outcome. If the business is under real financial pressure, get qualified professional advice promptly rather than working through this alone.
If the selling price does not cover direct costs, more volume deepens the loss.
Before borrowing for growth, calculate what each product, service or contract actually contributes after labour, materials, fulfilment, commissions, variable overhead and everything else needed to deliver the sale.
Financing cannot turn a loss-making sale into a profitable one. Correct pricing, cost or product mix first.
"General cash flow" does not explain the amount, the date or the business result. A financeable decision states the exact amount, the exact use, when the cash is needed, what activity it supports, and which cash will repay it.
If you cannot complete that statement, the problem is diagnosis, not funding.
An unsigned contract, a hoped-for investor, an unconfirmed sale or a promise from an overdue customer is not a base case.
Financing decisions can carry uncertainty, but the downside has to be survivable. If one event failing means the business cannot pay payroll, tax, rent or the facility itself, the exposure is too high.
Refinancing can be entirely legitimate when it lowers cost, simplifies obligations or aligns repayment with cash flow.
The warning sign is repeated borrowing that never reduces the underlying deficit. If each new facility exists mainly to meet the payments on the last one, stop and get independent accounting, legal or restructuring advice before adding more.
If the business does not know its cash balance, liabilities, tax position, unpaid invoices, inventory or margins, it cannot size a new obligation safely.
Prepare current accounts, a complete debt schedule and a dated forecast before deciding anything: Build a rolling 13-week cash-flow forecast
Resolve unexplained balances and overdue obligations first. Borrowing into a position you cannot measure increases the risk rather than relieving it.
Test lower sales, later customer receipts and higher costs. Define a minimum operating reserve. Pause if the downside case requires the business to miss payroll, tax or GST, rent, critical suppliers, existing financing payments, or any other obligation it is required to meet.
A working base case is not enough if a modest delay creates immediate failure.
Equipment and stock consume cash before they generate a return. Pause when demand rests only on optimism, when there is no exit for unsold inventory, when the asset may become obsolete quickly, when installation or customer acceptance is uncertain, or when the debt would continue after the asset loses its value.
Stage the purchase, obtain firmer customer evidence, or test a smaller commitment.
A short facility can mature before the cash returns. A long loan can leave years of payments after a short-lived need has ended. An overdraft that is permanently drawn conceals a recurring deficit rather than bridging a gap.
Remap the cash cycle. Changing the product label does not fix a mismatch between the obligation and the repayment source.
A business decision can create obligations that reach beyond the company's operating cash. Before signing, understand any personal or corporate guarantees, what assets are being offered as security, what happens to your other facilities if you default on this one, what rights the lender has after a missed payment, and what enforcement would mean in practice.
Do not accept a guarantee or security obligation simply because the monthly payment looks affordable. Those are separate questions, and the second one only matters when things have already gone wrong.
There is a line worth naming plainly, because it is the one most likely to be crossed by an owner searching for another lender.
If a company cannot pay its debts as they fall due and continues taking on new obligations anyway, the people running it can end up personally answerable for debts they would otherwise not have been responsible for. Where exactly that line sits is a legal question and it depends on the facts.
You are not expected to work that out yourself, and you should not try to. If the business is at or near that point, the next call is to a qualified accountant, lawyer or restructuring professional — not to another lender. Getting that advice early usually widens the options available; leaving it late usually narrows them.
Depending on the situation, alternatives may include:
These have trade-offs. Quantify their cost, timing and risk rather than assuming they are free.
Stop and investigate if any answer is yes:
A flag means resolve it or get advice. It does not mean apply anyway and hope the assessment goes your way.
Borrowing may be worth assessing when the need is defined, the underlying activity is viable, repayment comes from identifiable cash, and the downside remains manageable.
Prepare or restructure first when records, pricing, collections or the shape of the facility can be improved.
Pause and seek advice when debt would mainly postpone failure, when essential obligations are at risk, or when you cannot determine the true financial position.
This article deliberately carries no application link. If the honest answer is that borrowing is not the next step, that is the useful outcome.
Figures verified on 3 August 2026. Scheme parameters, rates and lender requirements change — check the primary source before relying on any figure.
Fundwise is an intermediary, not a lender. This is general information, not individual financial, legal, tax, accounting or credit advice. Financial institutions run their own eligibility and credit assessments and set all terms — we cannot guarantee approval, rate, amount or timing.
If this article suggests borrowing is not your next step, that is a useful outcome. Get in touch if you would like help working out what is.
Tap on our knowledge to make better decisions for yourself.
