Today’s most effective Chief Financial Officers (CFOs) see debt differently. They don’t fear it—they use it. Not recklessly, but strategically. Debt, when applied correctly, is no longer a red flag. It’s a lever for growth.
And it’s about time we talked about it.
The Old Way of Thinking
Many business owners, particularly in India’s mid-sized and family-run companies, were taught to avoid loans. The goal was to stay “debt-free,” assuming that meant safer, more sustainable operations.
That made sense at a time when credit was difficult to access and interest rates swung wildly. But the business landscape has evolved. The tools have changed, and so has the mindset.
The Shift: From Liability to Strategy
In a 2024 McKinsey CFO Pulse report, over 60% of global CFOs now view debt as a growth strategy, not a last resort. In India, we’re seeing the same shift.
Take the example of a manufacturing firm in Gujarat. The business had maxed out production capacity but didn’t want to dilute equity to fund expansion. With the right financial planning and a short-term unsecured loan, they expanded to a second manufacturing unit in Rajkot, hired 40+ staff, and increased production capacity by 60%. Within 18 months, revenue doubled. The loan was repaid early. Debt wasn’t a drag—it was the driver.
Why Debt Works Now
Three changes explain this shift:
1. Better Lending Models
Lenders now use deeper insights—analysing cash flows, sales pipelines, and customer retention—to evaluate creditworthiness. This means a business without collateral, but with solid fundamentals, can still raise growth capital.
2. Predictable Policy and Rates
India’s economic environment is more stable than it was a decade ago. Access to fixed-rate loans allows CFOs to plan long-term without fear of sudden shocks.
3. Stronger Business Discipline
Post-pandemic, most companies have built internal resilience—cash buffers, digital processes, and data-led decision-making. This makes them better equipped to use debt wisely.
Debt or Equity? Pick Your Poison—Wisely
When companies need money, they have two main options: take out a loan or give up some ownership. Selling equity brings in cash that doesn’t need to be paid back, but it means giving up some control of the business. Loans are different—they’re temporary and can be paid off. If used wisely, debt lets founders keep full control while still fuelling growth.
According to a 2023 CRISIL report, Indian SMES that used structured debt solutions grew 1.6 times faster than those that didn’t, while maintaining healthy margins. That’s not an opinion. That’s data.
The Right Questions to Ask
Debt is only dangerous when used unthinkingly. Smart CFOs ask:
- Will this loan pay for something that generates profit?
- Are we confident in managing repayments across economic cycles?
- Is this the best type and term of loan for our needs?
At A&H Capital, we’ve seen time and again that the businesses that ask these questions upfront are the ones that come out ahead.
A Cultural Shift worth Noting
Perhaps the most important shift isn’t in spreadsheets, but in mind-set. A second-generation entrepreneur we worked with put it best: “My father built the business without loans. But I saw we were growing too slowly. We took a calculated risk—and it worked.” This isn’t about being reckless. It’s about being ready.
The Bottom Line
Debt isn’t the enemy—it’s your strategic partner. Today’s CFOs don’t just manage risk; they harness it. In a market where speed, control, and competitive advantage are everything, the right kind of debt can unlock it all. The only question is: are you using it to your advantage?
“At A&H Capital, we help CFOs use debt with precision. If you’re thinking about growth, let’s talk.”
By Alok Nag, Founder, A&H Capital