More money for the same problem

My professional insights · Lyudmil Karaulanov · 5 min read

Published: 1 August 2026 · Version 1.0

When payday is approaching and an expected payment has still not arrived, it is difficult to discuss financing calmly. People are relying on you, suppliers have your promises, and work needs to continue. It is entirely understandable that the first question at such a moment is where the money will come from.

It is worth thinking about next month too, however. If the required sum arrives today, what will be different then? Will we have overcome a temporary shortfall, or will we face the same need again, now with another liability?

What will the new funds change?

A viable business may need financing because it is growing, holding inventory or waiting for receivables. That is different from an activity that consistently makes losses. In both cases, the bank account may look equally worrying.

What matters, therefore, is where the shortfall comes from. Is the product profitable? Are receivables collected on time? Is one division supporting another without this being clearly visible? Are there expenses that remain high regardless of sales?

Additional funds can provide time for change. But only if the change itself has also been agreed. Otherwise, temporary relief can easily postpone a difficult decision, and the next conversation begins with less freedom.

What exactly are we seeking financing for?

In my view, it is important to specify how the money will be used, when results are expected and what will service the debt. If a project is being financed, its cash flow is crucial. If an accumulated deficit is being covered, the question is why it will not recur.

A scenario for delayed revenue is also needed. When will we reassess, and under what conditions will we stop investing? These questions are more useful before signing, while we can still choose the terms.

Whom are we bringing into our relationships?

A loan, a new partner, an asset sale and a strategic partnership serve different purposes. With a loan, you retain ownership but take on an obligation to repay. With equity participation, you share future value and may also share decision-making.

It is natural to compare the interest rate or proposed percentage first. But the other party's rights also belong in the calculation. Will they be able to restrict dividends, new borrowing or asset sales? Will they have a veto? How will they receive information, and how will they exit their investment?

These are normal questions for the provider of finance too. What matters is that their protection is compatible with the way you need to run the business.

What is worth putting in order beforehand?

Sometimes preparation requires clarification of internal loans, informal payments and authority to spend funds. At other times, a loss-making activity must be discontinued or relationships between partners settled. Separating properties and projects may also have a place, where applicable and carefully coordinated with the other obligations.

Not every change can wait for the ideal moment. But it is important to know what we are financing: sustainable development, a transition to a better model, or merely a reprieve with no clear next move.

The personal commitment deserves a separate conversation

A mortgage, a pledge of shares and a personal guarantee can make financing possible. They also change the scale of what you are putting at risk. I would therefore keep them separate from the discussion of the monthly instalment, especially where they affect assets on which the family relies.

Particular attention is needed where you are personally liable but others decide how the money is used. In such cases, confidence in people needs to be supported by sufficient information and authority.

Where is the point of instability?

What this concept means →

It appears when the relief brought by receiving the funds is taken as proof that the problem has been solved. The account is no longer empty, but the cause of the shortage may remain.

New financing makes sense when it creates an opportunity, rather than merely another deadline to worry about. That is why, for me, describing the change the funds are meant to bring, and how we will know that it is actually happening, comes before seeking the money itself.

This material is of a general analytical nature and does not constitute individual legal, tax, financial or investment advice.