Building Financial Resilience with Debt

Resilient SMEs treat debt as a strategic asset: planned, measured, diversified, and optimized over time.

Healthy foundation:

• Target debt-to-equity ranges by sector
• Use equity for long-gestation bets; debt for working capital and assets
• Recalibrate as earnings and risk change

Portfolio strategy:

• Match products to needs (WC lines, term loans, RBF, AR finance, equipment leases)
• Stagger maturities to avoid refinancing cliffs
• Blend fixed and variable rates
• Maintain liquidity backstops

Interest rate risk:

• Prefer fixed-rate where possible
• Partially hedge; ladder repricing dates
• Monitor rate outlook and covenant headroom

Lender relationships:

• Diversify across banks, NBFCs, fintechs
• Keep consistent reporting and transparency
• Hold quarterly reviews with forward plans and risks

Scenario planning:

• Build base, bull, and bear models
• Shock revenue, margins, and cash conversion cycle
• Define trigger points for cost actions and capital calls

Technology:

• Centralize debt docs and covenants
• Dashboards for DSCR, leverage, liquidity, maturities
• Alerts for KPI thresholds and repayments

Regular checkups:

• Quarterly reviews of leverage, DSCR, CCC, liquidity runway
• Annual refinancing check; update data room
• Independent oversight for major capital decisions

Future-proofing:

• Keep undrawn lines and pre-approved seasonal facilities
• Build track record for ratings and capital markets access
• Institutionalize investor relations and governance

Key habits:

• Plan maturities like a calendar
• Keep buffers for shocks
• Avoid concentration risk (one lender or facility)
• Measure ROI of every funded initiative
• Communicate proactively with lenders

A resilient financing strategy supports growth through cycles. With the right structure and discipline, debt becomes a strength—not a risk.