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Having more loans does not necessarily equate to declining performance. The effects of having loans are dependent on where the company is to utilize the loans. That is, long-term loans are best used to finance capital expenditures, expansion, and related long-term business undertakings. Whilst, short-term loans will be of effective use if it will be utilized for working capital fund requirements.
Till there is budgeted balance between the inflow and outflow there won't be any effect. But if the inflow is too less than budgeted then problems might arise.
it can has a bad effect or not it all depend on the situation of the business
effect the a loan can have
* this increase the liabilities of the business
*amount not recover can have an effect on the business image and might not be able to get any loan from bank again.
the good point is
* help the business to pay all the amount due
* help to increase the business investment to expand the business or move on new project.
