Managing Debt and Loans for Small Businesses: A Controller’s Perspective

For most small businesses, debt is a four-letter word that feels a lot longer when you’re trying to sleep at night.

Whether it’s a loan taken out to buy new equipment, cover payroll during a slow season, or simply keep the lights on, borrowing money is often a necessary part of growth.

But when not managed properly, that debt can become an anchor instead of a springboard.

As a Controller, I’ve had a front-row seat to both the smart and not-so-smart ways businesses manage debt. I’ve seen the full spectrum, from companies juggling multiple loans like a circus act to others who treat all debt like it’s radioactive. Spoiler: Neither approach works for long.

Let’s take a walk through what it really looks like to manage debt and loans effectively when you're wearing the Controller’s hat and trying to keep your business both profitable and sane.

Understanding the Good, the Bad, and the Ugly of Business Debt

First things first. Not all debt is bad. In fact, in the right context, debt can be your best friend. Think of it like coffee. A little gives you the boost you need to get through the day. Too much, and you’re jittery, unproductive, and asking existential questions at 2 a.m.

Strategic debt—used to finance expansion, invest in tools that increase productivity, or build inventory in advance of a busy season—can actually improve your bottom line. But debt becomes dangerous when it’s used to plug financial leaks or when repayment terms aren’t clearly understood.

This is where a Controller’s discipline comes in. Managing debt isn’t about avoiding it. It’s about using it intentionally, monitoring it relentlessly, and aligning it with long-term financial goals.

Establishing a Debt Management Framework

The first step to controlling business debt is visibility. You can’t manage what you can’t see. I’ve walked into companies where the only record of debt obligations was a loan agreement collecting dust in a filing cabinet or worse, someone’s email inbox.

A proper debt management framework includes:

• A centralized debt schedule with all outstanding obligations

• A clear understanding of interest rates, maturity dates, and payment terms

• Monthly cash flow projections that factor in debt service

You’d be surprised how many small businesses operate without a forecast that accounts for loan payments. That’s like trying to drive a car without checking if there’s gas in the tank.

Cash Flow Is King, but Debt Service Is Queen

In my line of work, cash flow is everything. You can show a profit on your income statement and still be dead in the water if your bank account doesn’t agree. That’s why any debt management strategy has to start with understanding how loan payments impact your day-to-day cash position.

I like to look at the debt service coverage ratio (DSCR). That’s the ratio of cash available to debt obligations. A DSCR greater than 1 means you can cover your debt payments with room to breathe. Less than 1 means you’re borrowing from Peter to pay Paul, and Peter’s starting to send angry emails.

If your business is skating close to that line, it’s time to consider restructuring or consolidating debt. This might mean negotiating longer terms, lower interest, or even refinancing with a more favorable lender.

Choosing the Right Loan for the Right Reason

Not all loans are created equal. A Controller’s job is to match the type of financing with the business need. Need to buy a vehicle or piece of machinery that will last five years? A five-year term loan makes sense. Financing a temporary cash gap? A line of credit is a better fit.

What you want to avoid is using short-term financing for long-term investments or vice versa. I once worked with a company that used a merchant cash advance to fund the buildout of a new location. Let’s just say that did not end well. High fees and daily payments nearly strangled their cash flow before they ever opened the doors.

Don’t Forget the Covenants

Loan covenants are the fine print that most small business owners don’t read until they’ve accidentally broken one. But from a Controller’s perspective, covenants are landmines—silent, dangerous, and often buried in legalese.

These are conditions that lenders set, like maintaining a minimum net worth or not taking on additional debt without permission. Violating a covenant can trigger default, even if you’ve made every payment on time.

That’s why part of managing debt is not just making payments but actively monitoring compliance with all loan agreements. It’s one of those things that seems tedious until it saves your business.

When to Seek Help

Not every business owner is a numbers person, and that’s okay. But debt management isn’t something you want to wing. If the accounting team is overextended or if you’re unsure about the impact of your current debt strategy, it’s time to bring in a Controller or fractional CFO.

At Procuris Consulting, we help small businesses get a handle on their financial health by building real systems for managing debt, optimizing cash flow, and ensuring the business doesn’t just survive—but thrives.

Because ultimately, debt is just a tool. Like any tool, it can build something great or cause serious damage depending on how you use it. A Controller’s perspective isn’t about fear of debt. It’s about clarity, control, and smart decision-making.

And remember, sometimes the most powerful financial move you can make is simply understanding where your money is going before you ask for more.

Final Thoughts

Managing debt doesn’t have to feel like walking a tightrope in the dark. With the right processes, a little discipline, and a solid understanding of your numbers, it becomes just another lever to grow your business.

If you’re looking for help building a debt management strategy that works for your business, or you just want to make sure your loans aren’t silently choking your growth, reach out to the team at Procuris Consulting. We’ve been there. We’ve seen the mess. And we know how to clean it up.

Because small businesses deserve big financial clarity. And that’s something worth investing in.