2 min read
Why not just use the cash
Draining your reserves to avoid interest can leave the business exposed if a shock or opportunity arrives. A cash buffer is insurance; spending it to save a modest financing cost can be a false economy.
When borrowing makes sense
If the need is short-term and the finance is affordable, borrowing preserves your buffer for genuine emergencies while spreading the cost. Compare the cost of borrowing against your cost of capital and the value of liquidity.
What it means for you
Keep some powder dry.
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.
Frequently asked questions
Isn't using savings always cheaper?
On the surface, but it ignores the value of liquidity. Reserves let you handle shocks and seize opportunities. Preserving them can be worth a reasonable financing cost.
When should I use cash instead of borrowing?
When you have ample reserves beyond a healthy buffer, the need is not urgent, and the cost of finance clearly outweighs the benefit of keeping the cash. It is a balance, not a rule.
Related reading
Business loan or credit facility: which is better?
A loan gives a lump sum for a known purpose; a credit facility gives reusable headroom you draw and repay as…
Read →
What does a business loan actually cost?
The real cost of a business loan is the total you repay minus what you borrowed — interest plus every fee —…
Read →
How much can my business borrow?
How much your business can borrow depends mainly on your turnover, trading history and what the repayments…
Read →
Should I use my personal savings or borrow for the business?
Borrowing keeps your personal safety net intact and your money separate from company risk; savings avoid…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.