Borrowing

The Bible does not prohibit borrowing, but it is clear about the risks and dangers arising from an inability to repay.

The Biblical norm is to be debt free, as God revealed to Moses. This was a principle given after the people of Israel were freed from bondage in Egypt.

The psalmist stated that those with money tend to rule over people who need money, and those borrowing money come under the power of those lending money. He even goes on to say that the borrower becomes a slave to the lender. God has set us free and does not want us to revert to a ‘yoke of slavery,’ as Paul writes to the Galatians. When we borrow, the creditor has first call on our money. Just miss a few payments and this becomes very clear! If God is the Owner of the company, then He must have first call on how the money is to be used.

Often a business that is in financial trouble because of poor management or other prob­lems will sustain itself by borrowing instead of resolving the real problems. The proverb says that wise managers see trouble and prepare for it. Using borrowed money can provide a false sense of security that allows a correctable situation to grow into an out-of-control problem.

James warns us about presuming that future earnings will enable us to repay our debt. He points out that the future is uncertain and so our debt payment capacity is also uncertain.

I mentioned in a previous reading that we decided not to be dependent on the bank for financing our business. In our financial faith planning, we set goals towards building assets so that we either do not need to borrow or, if we do borrow, our assets will be enough collateral to guarantee payment. This has often meant that our growth was slower than we would have liked, but at least it was more solid. Building a solid cashflow means invoicing our customers without delay and getting our receivables in as soon as we can. It means limiting overhead expenses and building up a sound capital reserve.

Question for the day
Can you trust the Lord for provision, instead of the bank? What steps can you take to increase your cash assets?