One of the most common things I see business owners do to deal with debt is borrow more. Then a bit more. Then a bit more again — until one day there's nothing left to borrow against. That's not a strategy. That's kicking the can down the road, and the road has an end.
I've been at the end of that road
I'm not saying this from a textbook. I've been there, done that. When you're under real pressure, borrowing feels like relief — the phone stops ringing, the creditor goes quiet, you buy yourself a few more weeks. But if nothing else has changed, all you've done is make the hole deeper and put more of your own skin on the line to do it.
Borrowing to survive is just kicking the can
Here's the trap. Most of the time the new money isn't fixing anything — it's just taking the pressure off. You borrow to pay the creditor who's shouting loudest. The underlying reason you got into trouble is still sitting there, untouched. A few months later you're back in the same spot, except now you owe more and you've used up another chunk of your security. Eventually you run out of road.
Before you borrow, answer one question: why?
Before you sign anything, get clear on what the money is actually for. There's a world of difference between borrowing that moves the business forward and borrowing that just delays the pain.
Ask yourself honestly — is this for:
- Expansion that will generate a return?
- Assets that will earn their keep?
- Marketing that brings in more than it costs?
- A genuine cash-flow gap you can see closing?
If the honest answer is "none of the above — it's to get a creditor off my back," that's the red flag. Taking the pressure off without changing the thing that caused the pressure isn't a fix. It's a delay you're paying interest on.
Before you sign on the dotted line
Borrowing might still be the right move — but not blind. Before you put the family home or the business on the line, work through:
- What problem is this loan actually solving?
- Will the business genuinely be better off, or just quieter for a while?
- What changes alongside the loan so I don't end up here again?
- What am I putting up as security — and can I afford to lose it?
- What happens if the plan doesn't work?
If you can't answer those clearly, don't sign yet.
Don't risk the house on the word of someone who profits from the loan
This is the big one. Before you put your remaining assets — and especially your personal assets — at risk, get a review from an independent third party who has no vested interest in the decision.
A bank or a finance broker is not that person. They make their money by lending you money. That doesn't make them dishonest — it makes them conflicted. Of course the answer is "yes, here's the loan." You need someone whose only job is to tell you the truth, even when the truth is "don't."
Get an independent read before you commit
That's the work I do. I sit on your side of the table — no loan to sell, no commission to earn — and help you work out whether borrowing makes you stronger or just buys time you'll pay for later.
Before you sign, talk to Doug Constable — 0499 499 009 — for a straight, independent read on whether more debt is the answer.
Common questions
Is it ever a good idea to borrow to pay business debt?
Sometimes — if the borrowing fixes the underlying problem and the business is genuinely better off for it. The danger is borrowing only to relieve pressure while the cause goes unaddressed. That's when more debt makes things worse, not better.
Why not just ask my bank or broker?
Because they profit from the loan. Get their offer by all means — then run it past someone independent who doesn't earn a cent either way before you put your home or assets up as security.