How to decide whether to borrow or use your reserves

Step 1 — start with the return

Ask what the spend earns. If it funds something that will generate more than it costs — a contract, revenue-producing equipment, a bulk discount — the case for keeping momentum is strong, whichever way you fund it. If it earns nothing and just depletes cash, the question is whether you need it at all. The return frames everything that follows.

Step 2 — protect your buffer

Never drain your cash reserve to fund a cost, however tempting free-looking cash is. The buffer exists to absorb shocks; spend it on an opportunity and the next bad month becomes a crisis. If using reserves would take you below a safe buffer, that alone points toward borrowing and preserving the cushion.

Step 3 — compare the true cost

Reserves feel free, but they're not — cash spent isn't available for the next opportunity, and holding a thin buffer carries its own risk. Borrowing has a clear price. Weigh the true cost of borrowing against the return, and against the value of keeping your cash intact. Often, borrowing to preserve the buffer is the safer choice even when you could self-fund.

Step 4 — consider doing both

It's rarely all-or-nothing. Part-fund from reserves and part from a facility, keeping the buffer safe while limiting the borrowing. This blend often beats either extreme — you neither drain your cash nor over-borrow. Match the split to how confident you are in the return and how tight your buffer is.

Step 5 — keep borrowing on the company

When you do borrow, keep it on the business and free of personal risk. Credicorp lends to the company, not to you personally, and takes no personal guarantee. Test that the repayments are affordable alongside your other commitments with the affordability calculator.