The 5-point checklist
- Return: will the investment generate more than it costs, including fees?
- Timing: will returns arrive before or during the repayment period?
- Affordability: can you cover payments in a slow month?
- Fit: is the product matched to the purpose and term?
- Alternatives: could you fund it from cash flow without slowing growth?
Good reasons to borrow
Buying equipment that increases output, opening a location with proven demand, buying inventory at a discount, or consolidating costly debt are all common, sound uses.
Reasons to pause
Covering ongoing losses with no plan to fix them, or funding long-term projects with short-term money, usually makes problems worse.
Frequently asked questions
How much should a small business borrow?
Borrow the amount the plan requires and no more. Many lenders cap requests at roughly one to two months of revenue for short-term products.