Borrow enough — but not too much
The right amount is a narrow target. Fall short and the project stalls with money already spent; overshoot and you pay to carry cash that sits idle. A little discipline up front lands you on the number that actually fits.
Two ways to get it wrong
Under-borrowing feels prudent and often is not. If a job needs a certain amount to reach the point where it pays for itself, stopping short can leave you with the cost of borrowing and none of the benefit — a half-finished fit-out earns nothing, a part-filled order still can't ship.
Over-borrowing is the quieter risk. Extra headroom "just in case" feels safe, but every pound you draw carries a cost whether or not you use it. Money sitting in the account as a comfort blanket is money you are paying to hold.
A short method for landing on the number
- Cost the job properly. List every part of what you are financing and total it — not a round guess, an actual sum of the pieces.
- Add a real, sized contingency. A modest, deliberate buffer for the known unknowns — not a vague doubling "to be safe".
- Subtract what you can fund yourself. Cash you can commit without straining operations reduces what you need to borrow, and what it costs.
- Pressure-test the repayment. Check the resulting repayment fits comfortably inside normal cash flow — with room on an average month, not just a good one.
Right amount, right shape, right term
Amount is one of three dials, and they move together. The shape decides whether a fixed sum or a flexible line fits the need; the term should track how long the thing you funded keeps earning. Get all three roughly right and the finance quietly supports the business instead of dragging on it.
If a single number is hard to pin down because the need ebbs and flows, that is often a sign the job wants a flexible facility rather than a one-off lump sum — a question worth settling before you fix on an amount at all.
Then confirm it against real terms
Once you have your number, test it against the lender's actual amounts, pricing and terms. Sometimes the arithmetic nudges you to a slightly different figure once real costs are in front of you — which is exactly why the figures live at the source and are kept current.
Test your number
Check it against real amounts and terms
You have the method; the figures make it concrete. See the products and their real terms on credicorp.co.uk, or start an application when your number is settled.