There is no universal rule for how much a business should borrow, but there are practical checks that help you stay on the right side of proportionate. The goal is that your borrowing serves the business — bridging gaps, funding opportunities — rather than becoming a structural part of how the business runs.
A simple proportionality check
Once a quarter, compare your total outstanding borrowing against your average monthly revenue. If your outstanding balance is consistently more than one to two months of revenue, it is worth asking whether the borrowing is doing productive work or whether it has drifted beyond the original purpose. This is not a hard limit — some businesses operate legitimately with higher leverage — but it is a useful prompt for a honest review.
Separate borrowing by purpose
Keeping a simple log of what each draw or loan was used for makes proportionality much easier to assess. If you took a Credicorp Flex draw in January to bridge a supplier invoice and it was repaid in February when the customer paid, that is textbook proportionate use. If a draw from six months ago is still partly outstanding and you are no longer sure what it funded, that is a signal to investigate before drawing again.
Let revenue growth lead borrowing growth
A facility limit that made sense when you were turning over £200,000 a year may feel tight at £400,000 — and that is a legitimate conversation to have with us. But the right sequence is: revenue grows, then you review whether the facility needs to grow to support that revenue. Borrowing ahead of revenue growth in the hope that growth will catch up is a riskier posture and one worth being cautious about.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: Warning signs your business may be overtrading, When and why to consider refinancing a business loan.