Good debt, smart growth

For many Filipinos, the word "utang" still carries a negative connotation.

It's often associated with financial hardship, emergencies, or obligations that should be avoided whenever possible.

But ask seasoned entrepreneurs, and you'll likely hear a different perspective: not all debt is bad. Used wisely, borrowing can be one of the most effective tools for growing a business, expanding operations, or investing in opportunities that generate higher returns.

“Good debt”

In finance, this is often referred to as "good debt"—borrowing that creates value rather than merely covering expenses.

Consider a business owner who takes out financing to purchase new equipment that doubles production capacity. Or a retailer who secures additional capital to build inventory ahead of the holiday rush. Others may use financing to acquire a commercial property, renovate an existing facility, or open another branch in a promising location.

In each case, the loan is not paying for consumption. It is funding future growth.

Borrowing as an Investment

The Bangko Sentral ng Pilipinas (BSP) has repeatedly underscored the importance of access to credit in promoting entrepreneurship, job creation, and inclusive economic growth. A well-functioning financial system allows businesses to invest, expand, and respond to changing market conditions through responsible financing.

This is particularly important for small and medium enterprises (SMEs), which account for the overwhelming majority of businesses in the Philippines and employ millions of Filipinos.

Yet despite their economic contribution, many businesses still face the challenge of raising capital without disrupting day-to-day operations.

Financial advisers often point out that relying solely on internally generated cash can sometimes slow expansion. Opportunities rarely arrive when cash reserves are at their highest, making access to financing an important part of long-term business planning.

Unlocking Value from Existing Assets

One increasingly common approach is to leverage assets that entrepreneurs already own.

Instead of allowing a property to remain an idle asset, some business owners use it as collateral to access funding for expansion, equipment purchases, working capital, or other major investments.

Doing so enables them to preserve liquidity while putting existing assets to work.

Banks have likewise expanded financing solutions to support a wider range of business needs.

Among these is BDO Unibank's Multipurpose Loan, which allows qualified borrowers to use residential, commercial, mixed-use properties or vacant lots as collateral for financing. Depending on the borrower's needs, funds may be used for business expansion, working capital, construction, property acquisition, equipment purchases, or other major financial requirements. Borrowers may choose between a traditional term loan or a revolving credit line facility, providing flexibility depending on how funds will be used.

Financing Growth, Not Just Filling Gaps

Business financing is most effective when viewed as part of a broader strategy rather than a quick solution.

Successful entrepreneurs typically evaluate whether the expected return from an investment exceeds the cost of borrowing. If additional inventory leads to higher sales, new machinery improves productivity, or another branch increases market reach, financing can help accelerate growth that might otherwise take years to achieve.

The emphasis, experts say, should always be on responsible borrowing—matching loan terms with business objectives, maintaining manageable repayment capacity, and ensuring borrowed funds generate long-term value.

Looking Beyond Today's Balance Sheet

As Philippine businesses continue to navigate a rapidly evolving economy, access to flexible financing is becoming less about solving immediate cash shortages and more about positioning for future opportunities.

For entrepreneurs willing to plan carefully, borrowing is no longer simply about obtaining funds.

It is about putting capital to work.

After all, in business, the biggest risk is not always taking on debt.

Sometimes, it is letting good opportunities pass by because the capital to seize them was never within reach.