Would you take on debt to keep employees or let them go to save?
Hopefully, this is never a choice you have to make, but as an entrepreneur it is always a possibility. Would you feel more loyalty to your employees to keep them working (and working for you) or would you immediately look to cut costs to stay afloat without adding more debt?
Adding more debt is very dangerous for very small business if you can't guarantee you'll be able to turn things around. Renegotiating with staff on reduced hours or otherwise would be a safer bet to mitigate your business through the turbulence. You can only be loyal to a point and it should not overshadow survival.
No HR experts but if you have the possibility to stay viable by means of staying lean I would definitely entertain especially if you have used up all your buffers/reserves and if the likelihood and possibility of a business getting back up to speed due to the slowdown in the economy or for whatever reason is too far way in the distant future. For me, it would regretfully be to cut back. Nothing is permanent, only temporary.