Meet Nishi: the founder who knows borrowing from both sides

• Business name: N-Accounting

• Industry: Accountancy

• Founded in: 2014

• Top business products: Business loan

• Key learning: “Borrowing should never be used to hide underlying business problems.”

Founded in 2014, N-Accounting supports small businesses with accountancy, tax planning and financial management, helping owners make confident decisions about growth and profitability.

In Nishi’s view, funding is one of the areas where business owners need the most guidance. Having taken out loans at different stages of his own entrepreneurial journey, with varying degrees of success, he’s developed a practical understanding of how borrowing can support growth when used strategically.

We spoke to Nishi about the lessons he’s learned from more than a decade in business, the difference between good and bad debt, and the mistakes he believes business owners need to avoid when seeking finance.

What inspired you to start your business, and what were the biggest challenges you faced when you first started out?

I wanted to make a difference by supporting small businesses and building relationships focused on helping hardworking people elevate themselves in life.

The lack of experience and reputation was definitely the hardest part. I just had to work harder, learn more, and have more meetings to gain the confidence I needed to advise people.

How (if at all) has your own personal experience as a borrower shaped the funding advice you give to your clients? 

I understand the difference between good and bad debt, as well as the different types of funding available. This has helped me support clients by asking the right questions to understand their objectives when it comes to borrowing, and to make sure they’re doing it for the right reasons, and that it’s the right type of facility at the right price.

Over the past twelve years of running my business, I've borrowed money on three separate occasions, each for different reasons and with different outcomes.

The first was when I started the business. I took out a personal loan of approximately £15,000 through Hitachi Capital. Like many new business owners, cash flow was tight in the early days, so the funds were used partly to support my personal income while I built the business, and partly to invest in marketing activities to generate new clients.

The second was during the Covid pandemic, when I took advantage of the government's Bounce Back Loan Scheme and borrowed £50,000. At the time, there was significant uncertainty about the economy and the future of many small businesses, so I viewed the loan primarily as an emergency buffer. In practice, I never needed it for survival and used most of the funds to support marketing initiatives.

The third was around two years ago, when I took out a further personal loan of £25,000 from NatWest. Again, the intention was to accelerate growth through marketing. Unlike previous investments, however, the results were disappointing. Looking back, the return on investment simply wasn't there. Ironically, we later achieved far stronger growth by focusing on nurturing existing client relationships and referrals, rather than investing heavily in new marketing channels.

From a broader financial perspective, when does taking on debt typically make strategic sense for a business? 

Debt’s useful when you have a business and marketing model that has already been proven to work and you’re looking to add more fuel to that engine to scale the business. It’s also useful if you need to buy equipment that you are currently hiring, in order to reduce costs.

Borrowing can make sense when the cost of capital is exceptionally low. In the case of the Bounce Back Loan Scheme, the interest rate was so favourable that there was very little downside to having access to additional liquidity. In fact, for a period we earned more interest on the cash held than the borrowing cost us.

However, borrowing to fund unproven marketing activities can be risky. Having excess cash available can encourage inefficient spending and make it harder to scrutinise whether marketing investments are genuinely producing a return. By contrast, borrowing to scale marketing activities that are already proven to work can be a very effective growth strategy.

You've used borrowing to fund growth initiatives at various points. How did you determine it was the right time? 

The decision was usually based on the capacity available within the team to effectively look after more clients.

What are the most common questions or misconceptions small business owners have when they seek your advice re: financial products? 

The biggest oversight small business owners have when it comes to debt is not fully understanding the cashflow impact of repayment. There’re times where the interest rates and loan terms are so severe that the borrowing is effectively used just to service the debt, and sometimes businesses then have to secure additional funding just to cover the interest.

The most common question is usually around the overall rate of interest, as unfortunately commercial lenders don’t always make this clear or present it in a comparable way.

I’d encourage business owners to look carefully at the true cost of commercial lending. Many business finance products include administrative fees and use pricing structures that make comparison difficult. In my experience, some lenders quote flat rates rather than APRs, which can make the real borrowing cost less obvious.

Borrowing should never be used to hide underlying business problems. If a business is unprofitable or heading in that direction, an injection of cash can temporarily mask issues with pricing, profitability or operations. But, ultimately, those problems still need to be solved, and delaying the inevitable often results in a bigger challenge later.

If you were starting your business all over again, how would you approach funding and growth differently (if at all)? 

It's clear which parts of our marketing spend were effective, and interestingly, they were the things we were doing at the start. I'd resist the urge to experiment and instead stay focused on what I know has worked so I could compound the results from that. If I did it all again, I’d try to utilise profits for growth and be much more selective about borrowing for growth initiatives.