Strategic advice | January 2025 Managing debt in a growing business

Effective debt management requires a systematic approach to evaluating and optimizing your debt portfolio. For example, high-interest obligations can rapidly erode profitability, making their management a top priority. Smart businesses regularly conduct debt audits, ranking obligations by interest rate, term length, and strategic importance. This prioritization helps identify which debts consume the most resources and where restructuring efforts could make sense.

As always, the key to successful debt-management strategies is timing, says Rutledge. “Often, the best time to restructure, refinance, or consolidate is when your business shows strong growth and stable cash flow—precisely when you might feel least pressured to do so,” he adds. “This proactive approach delivers financial flexibility and strengthens your company’s readiness for growth.”

With a strategic mindset in place, the next step is taking a detailed look at your company’s financial metrics to make informed debt decisions.

Before making any debt decisions, you need a clear picture of your company’s current financial position. Work with your relationship manager to examine three essential metrics:

• Debt-to-equity ratio: Measures debt relative to company assets
• Interest coverage ratio: Shows ability to service debt payments
• Cash flow adequacy: Indicates whether operations can support debt obligations

This analysis often reveals optimization opportunities, such as converting variable-rate loans to fixed-rate debt for better predictability or, for flexibility, maintaining a strategic mix of both. Key optimization strategies include:

• Consolidating multiple loans into one
• Negotiating with existing lenders using improved business metrics
• Restructuring debt to match payment timing with cash-flow cycles

“The goal isn’t necessarily to minimize debt, but to structure it in a way that supports both current operations and future growth opportunities,” says Rutledge.

Beyond internal optimization, maximizing the value of business debt often requires strong external partnerships that can provide both capital and guidance. Your financial partner should be able to provide you with not only access to capital but also valuable industry insights that can help inform your decisions.

“The most successful businesses view their financial partners as strategic advisors, not just capital providers,” notes Rutledge. “These relationships often prove most valuable during major transition points, such as planning an expansion, restructuring existing debt, or considering an acquisition.”

A strong banking relationship can provide:

• Early insights into market changes affecting borrowing costs
• Creative financing solutions tailored to your needs and industry
• Evaluation for lending terms based on account history and deep knowledge of your company
• The ability to pull in specialized partners for different types of transactions that can help you achieve long-term goals

The key is building these relationships before you urgently need them. Your relationship manager will keep in regular communication with you, even during stable periods, to continually learn about different drivers of your business and the evolution of your goals. That knowledge becomes invaluable during critical growth phases or challenging market conditions.

Successful businesses view debt as an investment in their future rather than a burden. By taking a proactive approach to debt management today, you create the financial flexibility needed to seize tomorrow’s opportunities. Whether you’re planning an expansion, considering an acquisition, or navigating market changes, a well-structured debt strategy can help accelerate your journey from steady growth to market leadership.