Time to get your debt in order

Businesses with debts maturing, or requiring additional debt, in 2026 or 2027 should consider bringing forward funding applications to lock in access to their future funding needs.

There is considerable macro-economic uncertainty at an international level, exacerbated by conflicts in the Middle East and Ukraine. Combined with historically (very) high asset prices, the extraordinary levels of (growing) government indebtedness, existing economic weakness in many countries, and the changes and volatility being introduced under the Trump regime, the potential for unforeseen shocks is high and escalating.

The world is facing into genuine risks of a serious economic slowdown across major economies driven by a new round of inflationary pressures and new supply chain disruptions. Equally importantly, there is a potential for a liquidity crisis in financial markets that may disrupt lending and impact asset values. We are seeing early indicators of liquidity issues in private credit markets.

Escalating inflation will erode margins and profitability, while rising interest rates will increase costs and affect debt servicing capacity. Declining consumption is likely to reduce demand and sales. Banks are likely to face higher loan losses and tighten lending conditions. All of these forces will make borrowing harder. Act now to secure your future funding to minimise the risk of being unable to finance your business.

You should anticipate strict scrutiny and a more rigorous credit assessment by your bankers. Make sure you do your homework, understand the bank's lending conditions (if in doubt just ask your banker), and prepare your lending submission to meet the bank's expectations. Understand whether your business is creditworthy by reviewing its recent financial history and current balance sheet, and by preparing realistic, achievable forecasts (best, worst and likely case) that clearly demonstrate the capacity to service and repay the requested debt . Identify weaknesses and vulnerabilities, particularly in future cash flows. If your business under any financial stress have a clear plan to address the issues causing the difficulties and a process to manage and monitor progress in implementation of that plan. This is particularly important if your business needs to resolve any issues in order to service its future debt obligations.

Be conscious of the potential for external shocks, including any threats posed to your business by the failure of key suppliers or customers. Identify any potential external shocks and have a plan to respond quickly if any external events threaten your business. Don’t assume in your forecasts that things will get better in the external environment.

Demonstrate in your submissions to your bank that your understand the risks and that your business can continue to trade in the prevailing circumstances, that it can (within reason) withstand more difficult conditions, and that you have the experience and team to deliver on your forecasts.

Check out the ‘Publications’ tab for quick and affordable reading materials (including a free article on preparing your business for a recession) that may assist, or you can request bespoke advice via the ‘Advice’ tab. Don’t delay seeking professional advice and assistance if required.

Steve Lloyd

March 2026

Disclaimer

This article contains information and comments that reflect the opinions and ideas of its author which are general in nature and do not take account of the individual circumstances of any specific individual or entity. Strategies out­lined in this article may not be relevant to the circumstances of every reader or every entity and are not guaranteed or warranted to produce or result in any particular outcomes. Relevant laws and regulations vary from jurisdiction to jurisdiction and from time to time. Readers are advised to seek independent legal, financial or other professional advice that is current and tailored to their individual circumstances and geographic location. No warranty is made as to the accuracy and completeness of the information contained in this article. Both the author and Survive in Business Pty Limited specifically disclaim any liability or responsibility for any loss, damage or risk incurred to any party as a direct or indirect consequence of the use, application or reliance upon any of the contents of this article.