Debt Is Not the Enemy

Still on our debt series.

Debt becomes dangerous when it is driven by emotion instead of proper calculation.

Smart businessmen don’t fear debt.
Why?

Because they respect the mathematics behind it.

Debt itself is not evil.
But poorly structured and poorly calculated debt can destroy businesses, relationships, and even empires.

Rule #1: The Return Must Be Greater Than the Cost

Before borrowing any money — whether from:

Banks
Investors
Friends
Family

The first rule is simple:

The return must be greater than the cost.

Not slightly greater.

Significantly greater.

If the income generated from borrowed money cannot comfortably exceed the repayment obligation, that loan becomes pressure instead of leverage.

Smart business builders always leave room for uncertainty, because business rarely goes exactly as planned.

One Dangerous Mistake Many Businesses Make

Another common mistake is borrowing the right money with the wrong structure.

Many small businesses take short-term loans to fund long-term projects.

This mismatch creates unnecessary financial crises.

When the repayment timeline does not match the investment timeline, pressure begins to build.

Match the Loan With the Asset

Smart businesses always match the loan structure with the asset’s payback period.

Here’s how it should work:

1. Short-Term Financing

Use short-term facilities for inventory or fast-moving products.

These are assets that turn over quickly and generate cash within a short time.

2. Medium-Term Financing

Equipment or machines that generate income over several years should be funded with medium-term loans.

This allows the business to repay gradually as the equipment produces income.

3. Long-Term Financing

Large projects like:

Property development
Factories
Major infrastructure

Require long-term funding.

These projects take time to generate returns, so they need repayment structures that match their timeline.

When the loan structure matches the asset’s payback period, repayment becomes far more manageable.

The Question Banks Always Ask

Banks are not emotional when it comes to lending money.

They focus on one simple question:

“Can this business consistently repay the loan?”

That’s it.

This is why your income must comfortably exceed repayment obligations.

Healthy borrowing always leaves a margin between what the business earns and what it owes.

Debt Doesn’t Kill Businesses — Miscalculation Does

Debt itself is not the problem.

Miscalculated debt is.

Every billionaire in the world uses debt.

Yes — every single one.

Debt becomes powerful when it is backed by:

Clear numbers
Realistic projections
Proper financial structure
Contingency planning

When these are in place, debt becomes a growth tool instead of a financial burden.

A Final Thought

Faith matters.

Grace matters.

But structure matters too.

Oluwa is involved in your borrowing.

But the structure and calculations are your responsibility.

When you get both right, debt stops being dangerous and starts becoming a powerful tool for building wealth.

Debt Is Not the Problem — Miscalculated Debt Is