2 min read
How to tell them apart
Good debt is an investment: equipment that lifts output, stock for a confirmed order, bridging a genuine gap while customers pay. It generates a return that beats its cost. Bad debt funds ongoing losses, lifestyle spending, or servicing other borrowing — it adds cost without adding value and usually just postpones a reckoning.
What this means for your company
Before borrowing, ask plainly: will this make the business stronger, or am I plugging a hole? Test the return with the return-on-borrowing calculator. Good debt, sized sensibly and matched to the need, is a normal tool of a healthy company. Bad debt is a signal to stop and seek advice rather than borrow more.
What it means for you
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.
Frequently asked questions
Is all debt bad for a business?
No. Debt that funds a return greater than its cost strengthens a company — it is how most businesses grow. The problem is debt that funds losses or overspending, which weakens the business.
Can good debt turn into bad debt?
Yes — if the expected return doesn't materialise, or you keep borrowing to service it. Review your borrowing regularly against the return it was meant to produce, and act early if it isn't paying off.
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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.