Funding a company turnaround

2 min read

Fix the model firstFinance funds recovery, not decline

Cash is oxygenStabilise the runway

Get advice earlyBefore the options narrow

What finance can and can't do

Borrowing in a turnaround buys time — time for a recovery plan to work, for costs to come down, for a new pipeline to convert. What it can't do is fix a business that's fundamentally loss-making. If the model works and the problem is timing or a shock, funding bridges the gap. If the model itself is broken, more debt just adds a fixed cost to a business that can't carry the ones it has. Be honest about which you're facing.

Stabilise the cash first

The immediate priority is runway: how many weeks of cash you have, and how to extend it. Tighten working capital hard — chase debtors, slow non-critical spend, talk to suppliers — before reaching for debt. See how to forecast cash flow to see the cliff before you reach it. Every week of runway bought internally is a week you don't have to fund.

Build the recovery case

Any lender funding a turnaround wants to see a credible plan — what went wrong, what's changed, and how the numbers recover. Vague optimism won't do; a clear, costed path will. This is also the discipline that tells you whether the turnaround is real. If you can't build a convincing recovery case, that's your answer, and it's better to know now. See business debt warning signs.

The traps to avoid

Two traps sink turnarounds. The first is borrowing to survive rather than recover — funding losses that keep coming. The second is expensive, desperate money: high-cost facilities taken in a hurry that raise the fixed burden just when you can least afford it. If the only funding available is punishing, that's a signal, not a solution. Take advice before you sign anything under pressure.

Get advice early

The single best move in a turnaround is acting early — while options are open and terms are reasonable — rather than late, when they've narrowed. Early action also protects you: continuing to trade or borrow when recovery is clearly impossible risks wrongful trading. Where the business is genuinely viable, Credicorp lends to the company with no personal guarantee. Model the recovery with the affordability calculator.

Frequently asked questions

Can borrowing save a struggling business?

Only if the underlying business can recover. Finance buys time for a real turnaround — a shock to ride out, costs to cut, a pipeline to convert. It can't rescue a fundamentally loss-making model; there, more debt simply adds cost. Be honest about which situation you're in.

What should I do first in a cash crisis?

Stabilise the cash: forecast your runway, tighten working capital, chase debtors and pause non-essential spend before reaching for debt. Every week of runway you buy internally is a week you don't have to fund externally — and it buys time to plan properly.

When should I get advice in a turnaround?

Early — while options are open and terms are reasonable. Acting late, when funding is scarce and expensive, narrows your choices and raises the risk of trading on when you shouldn't. Early advice protects both the business and your personal position.