How to Know When It’s Time to Borrow

Borrowing can be a growth tool—if the timing is right.

Many business owners hesitate to borrow. Not because they can’t qualify, but because they’re cautious about taking on debt.

That instinct makes sense.

But the better question isn’t whether debt is good or bad. It’s whether borrowing at the right time strengthens your business.

As John Smiley, Chairman and CEO of First Bank of Central Ohio, explains, “Debt isn’t the issue. Timing is. When capital is used intentionally, it can create stability. When it’s used reactively, it often creates strain.”

So how do you recognize the difference?

When Opportunity Is Outpacing Liquidity

If your business is consistently passing on expansion space, equipment upgrades, property acquisitions, or strategic hires because cash reserves are tight, that may signal undercapitalization, not discipline.

Growth requires resources. When opportunity repeatedly bumps up against liquidity, it may be time to evaluate your capital structure.

When the Business Is Operating from Strength

Borrowing from a position of stability is very different from borrowing under pressure.

If revenue is steady, margins are healthy, and operations are predictable, financing can help you scale without draining your reserves.

The strongest borrowing conversations often happen when things are going well—not when they’re strained.

When Short-Term Tools Are Carrying Long-Term Weight

If a line of credit stays near its limit for extended periods, it may not mean the business is in trouble.

It may mean the structure needs adjusting.

Long-term investments are usually better supported by long-term financing. 

“Aligning the lifespan of the loan with the lifespan of the asset,” Smiley notes, “protects cash flow.”

When There’s a Clear Objective

Borrowing tied to a specific, well-defined goal looks very different from borrowing to solve yesterday’s problem.

Expanding into a second location. Purchasing a building instead of leasing. Upgrading equipment before it becomes unreliable. Those are deliberate, proactive decisions.

When financing follows a plan, it becomes part of your business strategy—not a reaction to the situation.

“The healthiest borrowing conversations happen before there’s pressure,” Smiley adds. “When you’re planning ahead, you have options.”

The Bottom Line

Borrowing shouldn’t feel rushed. It shouldn’t feel like a rescue.

Used thoughtfully, capital can preserve liquidity, support growth, and strengthen long-term positioning.

The key is timing.