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Congratulations on Your New Loan. Your Debt Just Grew—and So Did the Cost of Failure.

20/07/2026

Credit Is Expanding. Production Is Shrinking.

In the second quarter of 2026, demand for loans continued to rise among both SMEs and large companies. Banks expect that demand to grow even further in the third quarter.

But at what cost?

As of 3 July 2026, the weighted average interest rate on TRY-denominated commercial loans stood at 53.29%.

Despite that cost, a TRY 100 billion financing programme was announced at the beginning of the year. Then, on 14 July, another TRY 250 billion loan package was introduced to support the working-capital needs of the manufacturing sector.

But is production growing too?

No.

The Istanbul Chamber of Industry Türkiye Manufacturing PMI fell from 49.8 in May to 47.1 in June. Any reading below 50 signals contraction. New orders declined, while output, employment and purchasing activity all weakened.

According to TurkStat, total industrial production recorded zero annual growth in May. Manufacturing output fell by 3.3% compared with the previous month.

The market did not grow either.

Exports fell by 9.5% year on year to USD 22.461 billion, while imports declined by 10.8% to USD 28.071 billion.

Companies are borrowing more.

But they are not producing more, winning more orders or exporting more.

So what exactly are these loans growing?

The product? The market? Profitability?

Or merely the debt sitting on the company's shoulders?

My experience tells me this:

When a company begins devoting most of its energy not to developing products, winning new customers or expanding its market, but to searching for loans, manufacturing collateral, rolling over maturities and refinancing old debt, the decline has already begun.

Payroll may still be met.

The machines may still be running.

Trucks may still be leaving the factory.

But the company is no longer managing its business.

It is managing its debt.

Because failure does not begin on the day the cash runs out.

It begins on the day management surrenders all its attention to keeping the debt alive.

Not a Credit Problem. A Management Crisis.

The first loan does not destroy a company.

Forgetting why the money was borrowed does.

You borrow to buy machinery, increase capacity, develop a product or enter a new market.

If the additional value created is greater than the total financing cost, the loan has done its job.

That is financing the future.

But if the loan is used to pay salaries, taxes, suppliers or the instalment on a previous loan, there is no future being financed.

Yesterday's bill is simply being placed on tomorrow's shoulders.

Every new loan brings more than cash.

It brings interest, instalments, collateral requirements and a narrower room for manoeuvre.

Then the cycle begins.

Sales are not enough.

A loan is taken.

Interest costs rise.

Costs and prices increase.

Competitiveness weakens.

Sales fall further.

Another loan is sought.

Management buys the same problem again—at a higher price every time.

It may be called a temporary liquidity need, a working-capital gap or bridge financing.

The labels change.

The reality does not.

If the same problem has been described as "temporary" for the third time, it is no longer temporary.

The business model can no longer finance its own existence.

That is where the real collapse begins.

Management gives the bank the time that should have gone to customers.

It gives collateral negotiations the attention that should have gone to the product.

It gives debt rollover the energy that should have gone to the market.

If your company's best presentation is being made to a bank rather than a customer, you are trying to persuade the wrong audience.

Then, when the bank refuses the loan, you blame the bank.

But the bank's "no" does not destroy the company.

It merely exposes the fact that the company was already unable to stand on its own.

Let's Pull a Rabbit Out of the Hat.

You do not escape this spiral by finding another loan.

You escape it by removing the reasons that made the loan necessary.

The first task is not to find a new bank.

It is to place a real 13-week cash-flow forecast in front of management.

Not hope.

Not optimistic projections.

Which week will the cash come in?

Which payments will go out?

Where will the shortfall appear?

Then stop looking at revenue and start looking at cash.

Which product actually makes money?

Which customer uses your company's capital for months?

Which order increases reported sales while emptying the bank account?

Not every sale is a good sale. Some customers do not buy your product; they use your company's money.

Loss-making products must be discontinued.

Terms must be renegotiated with customers who do not generate cash.

Excess inventory must be converted into cash.

Collection periods must be shortened.

And if necessary, the company must become smaller.

Because shrinking is not failure.

Trying to look big while losing money is failure.

Every debt must be placed on the same table, together with its amount, interest rate, maturity, collateral and original purpose.

If short-term debt is carrying a long-term problem, it must be restructured.

Idle assets must be sold.

From that point on, every new borrowing decision must answer three questions in writing:

What exactly will this money grow?

What new cash flow will repay it?

Will that cash flow exceed the total cost of the loan?

If there is no clear answer, the loan is not an investment.

It is merely buying time.

And if you spend that purchased time searching for another bank, you are not rescuing the company.

You are borrowing simply to preserve your ability to borrow.

The Final Word

Companies do not fail merely because they have debt.

They fail because they refuse to change the system that made borrowing unavoidable.

They continue producing loss-making products.

They finance customers who pay late.

They carry unnecessary inventory.

They lose cash while trying to look profitable.

And they continue looking to the bank for a solution.

There is also one question nobody wants to ask out loud:

Does the owner genuinely believe in the future of this company?

If the owner refuses to inject capital but expects the bank to take the risk, there is no financing problem.

There is a trust problem.

If your own company is too risky for your own money, you already have your answer.

Why should it be safe for the bank's money?

Sometimes searching for—and celebrating—the approval of a loan at such high interest rates is not a financing decision.

Beneath it lies a far more uncomfortable thought:

Keep the risk away from me. I will not inject capital. Let the company face the consequences. Let me keep playing boss for a little longer with the bank's money.

That is not ownership.

Ownership means carrying the company's risk. Playing boss means leaving the risk with the bank, the debt with the company and keeping the chair for yourself.

The real question is not whether the loan is approved.

It is what your company will become when the money runs out.

If all that remains is a new repayment schedule and a larger debt—instead of a stronger product, a broader market and healthier cash flow—you have solved nothing.

You have merely postponed the confrontation.

Congratulations on your new loan.

If you have not changed the company, you have only increased the debt and made failure more expensive.

Editorial Note

This article is a general commentary based on publicly available institutional data and reports, together with the author's professional observations and assessments. Expressions such as "failure," "collapse," "playing boss" and similar terms do not constitute legal, financial or factual findings concerning any specific natural or legal person. They are critical observations regarding corporate management and financial-sustainability risks.

The article does not target any individual, institution or company and does not constitute investment, credit, financial, legal or tax advice. Readers should seek advice from qualified professionals before making decisions concerning specific circumstances.

The data cited were valid for the periods and publication dates stated. Any subsequent revisions or changes should be verified through the latest publications of the relevant institutions. External links are provided solely for information and source attribution and do not imply full endorsement of the linked content.

Sources

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