Debt can be a powerful growth tool, until it isn’t.

Many businesses unknowingly operate within a broken debt system: borrowing without structure, repaying without strategy, and refinancing without foresight. You don’t need a financial audit team or a three-day retreat to figure out if your debt system is working against you. With just 15 minutes, you can spot the red flags and assess whether it’s time to take corrective action.

Here’s how.

1. Start With a Simple Debt Snapshot (5 minutes)

Grab a pen, spreadsheet, or whiteboard—whatever works best—and list out:

• All current loans and credit facilities
• The lender name and type (bank loan, MCA, credit line, etc.)
• Outstanding balances
• Monthly repayment amounts
• Interest rates
• Loan purpose

If this exercise takes more than a few minutes or feels overwhelming, that’s your first red flag. A healthy system is trackable. If your debts aren’t centralized or transparent, they’re likely mismanaged.

2. Check for Cash Flow Mismatch (3 minutes)

Now, glance at your monthly revenue vs. monthly debt repayments.

Ask:

• Are debt payments eating up more than 30–40% of monthly inflows?
• Are you ever borrowing to cover previous repayments?

• Do EMIs or auto-debits frequently cause cash shortfalls?

  If yes, you’re likely caught in a debt-servicing trap, where your repayments are unsustainably high compared to your income rhythm.

3. Review the Type of Debt vs. Use Case (3 minutes)

Look at what the loans were used for and how long the repayment term is.

Examples of misalignment:

• Taking short-term working capital loans to buy long-term assets
• Using high-interest unsecured loans to pay off payroll
• Funding business operations through personal credit cards

A well-aligned system uses long-term debt for long-term assets and short-term credit for short-term needs. If that’s not your pattern, your system is structurally flawed.

4. Spot Repetition and Refinancing (2 minutes)

Ask yourself:

• Have you taken multiple loans in the last 12–18 months to “stay afloat”?
• Are you constantly restructuring, refinancing, or switching lenders?
• Do you have multiple repayments scheduled across the week/month?
  
  If you’re always juggling loan commitments, you’re in a cycle, not a strategy. This is one of the most common signs of a debt system that’s reactive, not intentional.

5. Ask: Who’s Managing It? (2 minutes)

Finally, reflect on who is managing your debt strategy.

Is it:

• The CFO or finance head with a clear plan?
• You, as a founder, reacting to urgent needs?
• A loan agent calling with the “next best offer”?

If debt decisions are ad hoc or based on short-term fixes instead of long-term planning, the system is likely broken at the core.

Conclusion: What Next?

If any of the red flags above sound familiar, it doesn’t mean your business is doomed. It means it’s time to step back and realign. In most cases, debt isn’t the enemy- mismanaged debt is.

Taking 15 minutes to assess where you stand is the first move toward regaining control. The next step? Building a repayment strategy, consolidating where needed, and structuring your future borrowing based on your actual business cycle.

You don’t need to stop using debt, you just need to start using it right.