Signs it's Time for Your Business to Apply for Financing

Jul 14, 2021

You have made it through part of 2019. You've reached some goals and have many more.

Perhaps you're thinking of expanding your company: increasing inventory, hiring more staff, upgrading technology or even purchasing another building?

As a growing business owner, you may need to make these changes to take your business to the next level.

If you're a small business owner without much capital, you might find it difficult to make these business upgrades. However, it's not impossible. You can make these upgrades if you apply for financing.

The one question you must ask, ready to apply for financing? In this post, we'll help you answer this question.

You'll discover nine signs to help you decide if you're ready to take the next step and apply. Without further delay, the signs you need to look for.

Is It Time to Apply for Financing?

These nine signs will help you decide if it's time for financing. Reading through will help you make the best decision for your growing business.

1. You Need More Office Space

Does your existing office space seem too small for your business? If you find it crowded to get things done, that could be a sign it's time to expand.

Whether you choose to purchase a new office space or extend your space in your current building, a loan can help you get the physical expansion you need.

Of course, you can go to a bank for this loan. Other options exist. It includes a working capital loan.

2. You Need to Hire More Staff

Expansion isn't limited to office space. You may have ample square footage in your building but need to expand your team.

When you don't have the manpower to handle your growing customers, financing can help you hire more team members.

Signs you need to hire more people include;

  • Being bombarded with jobs you can't handle
  • Needing more people to handle your inventory
  • Having shortage of material to conduct your business profitably

A solution to being understaffed or lacking material can be solved when you apply for financing. You can expand your staff and stock up on material for a job by securing a line of credit or a business loan.

3. You Need More Office Equipment

Equipment financing is available for companies who require purchasing additional equipment. The following are examples of equipment to finance;

  • Office equipment
  • Construction equipment
  • Upgrade technology for a job
  • Tools

Equipment financing is generally easy and fast to get approved because they come in small loans that are equal to the cost of the equipment you need to purchase.

For these loans, the predicted life of the equipment dictates the term of your loan. And the equipment acts as collateral to secure your loan.

Another option to purchase equipment is to apply for a line of credit. If your business profits are rising, it will make it easier to attain credit for lenders.

4. You've Landed the Opportunity of a Lifetime

Are you about to sign a deal with a new customer and could enable your business to take off? Will you engage in a profitable partnership?

You may need to increase your resources to take advantage of a profitable job. Then a line of credit or business loan could be essential.

To convince lenders, show them that your business is able to pay the loan. Present a timeline as to how this partnership will increase your bottom line.

Collecting the right data will enable you to achieve your business goals. Financial lenders need to know how you'll use your funding if you apply for a loan.

On the other hand, when you apply for a line of credit, you won't need to prove how you'll use the newly acquired capital for your line of credit after approval.

5. You're in Your Busiest Season

A great time to apply for financing is when you don’t desperately need it. If you're a seasonal business owner, the best time to apply for a business loan or line of credit is during your busiest season.

While it's easy to get off track when business is strong, it's important to look ahead to plan for your off-season before it comes.

It is suggested not to hold off until the slower season arrives to apply for funding. Your expenses will be higher and your cash reserve will be low.

Remember, financial lenders tend to favor your situation when business is booming. At this time it will be easier to get a loan or line of credit.

Collect expense forecast statements and cash flow documents to inform lenders of the cycle of your seasonal business. If you do not have these documents, now is the time to get going to strengthen your case.

6. You Choose to Consolidate Your Current Debt

Numerous business owners owe lenders money from a loan they're had not paid off yet. If you've been in business for a number of years, you might be paying off business loans.

When your business has more than one loan, you can save money through consolidation. Consolidation helps borrowers lower their interest rates on their existing debt.

When you refinance your loan, it will roll your current loans into a single loan. This option can help your business. Especially if you're locked into a loan with a high-interest rate. You can lower your rate through consolidating other loans.

One thing to keep in mind: don't extend your new loan for a longer term because it will end up costing you more in the long run, even if the interest rate is lower.

It's vital to check if you have an existing loan with prepayment penalties. These can influence how much you'll need to pay.

7. You Have Established Excellent Credit

Building excellent credit doesn't happen overnight. It takes time to build. You need to pay off debts on time, use different lines of credit and other factors to develop a positive borrowing history.

When your credit score reached an 'excellent' range, this is the most opportune time to apply for a line of credit or a new business loan.

If you're having some trouble paying off debt, it's a good idea to wait until your credit score is under control before apply for financing.

Once you've raised your credit you'll be able to access more affordable lines of credit and loans. This means better terms, better rates, and lower fees.

8. You Need to Regulate Your Cash Flow

When your customers pay your invoices on an inconsistent schedule and have a mix of invoicing terms, it makes it difficult to plan ahead. Your forecast will only go so far when your cash flow is inconsistent.

Financing a business can help business owners get a better handle on what's to come in the future.

If the above scenario sounds like the state of your affairs, you can apply for invoice financing. Invoice financing provides you with a cash advance with most of the sum of your invoices in one whole payment.

Your lender will keep around fifteen percent until your customers pay the invoices. At this time, you'll receive the balance.

While you'll have access to the cash you need before your clients pay the invoices, you'll have to pay interest and some fees depending on the terms you've agreed on with your lender.

9. You Don't Have the Cash to Accommodate a New Client

There is nothing worse than having to turn away business. But that could be your only option when you don't have the cash for a large purchase order or a new client.

Hopefully, this hasn't happened yet, but when it does, or even before it does, you might consider looking into business financing to ensure it won't happen to you.

You can apply for a short-term loan. Short-term loans are different than long-term loans. They're much easier to get because lenders' requirements for them are lower than long-term loan requirements.

With short-term loans, you can get money more quickly, sometimes in the same day. They can offer you the money to free up the liquidity you need to meet your goals. Here are some things to consider.

Another option is a line of credit. While it can be a good choice, you'll have to plan in advance since credit requirements are more stringent and the application process takes longer than a short-term loan.

The Bottom Line: Signs Its Time for Your Business to Apply for Financing

Now you know nine signs to help you decide if you're ready to apply for financing. A line of credit or a small business loan can be just what your company needs to take it to the next level.

Thinking about applying for financing? Contact us today to learn your financing options. We're always available to answer your questions.


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