Credit can accelerate a business, but only when the borrowed money has a defined purpose and the repayment plan is realistic.
Match the loan to the need
Short-term stock purchases, equipment acquisition and working capital gaps have different cash-flow patterns. Loan tenure should reflect how quickly the investment can generate cash.
Know the full obligation
Look beyond the amount received. Understand interest, charges, repayment dates, guarantor obligations and the consequences of late payment.
Do not borrow to hide a structural loss
If a business consistently spends more than it earns, fresh credit may delay rather than solve the problem. Review pricing, costs and demand first.