Applying for funding is an exciting time for small businesses, but it’s no small decision to make. Small business owners must be committed to investing the time and effort that applications require.
To make the process more manageable and boost the likelihood of success, here are some of the best times to apply for small business financing.
- When you want to make a big change in your business. Once your business has been open for some time, you may want to try something new. The possibilities of evolving your business are endless, from introducing a new product or service, to shipping goods nationally or internationally, to opening a new location, and many more. A loan can give your business budget the boost it needs to make these big dreams for your small business happen.
- When you need to build credit for the future. One of the key factors that lenders look at when making funding decisions is a business’s credit score. This means that borrowing in larger amounts can be difficult when your business has no credit history. You can build business credit by taking out loans in smaller amounts and managing them effectively to prove you’re a responsible borrower. This will make it easier for your business to get funding in larger amounts when you need it down the line.
- When you need equipment or commercial real estate. As your business grows, you will likely need to make upgrades to keep up. These can include purchasing new or additional equipment or opening a storefront for customers to visit in-person. A loan can provide the funding needed to make such purchases without making a major dent in your business’s savings.
- Your business’s busy season. If your business’s products or services become especially useful during a certain time of year, your business is probably at its busiest then. For example, retail businesses usually see the most traffic during the holiday season. Your business may need to compensate for this period by hiring additional staff, stocking up on supplies, or purchasing extra equipment. A loan can help you ensure that your business is ready to support customers during busy times.
The most essential factor to consider in deciding when to apply for a loan is your business’s readiness. Make sure your small business is in a position to afford a loan. When your business is in a good place, you can likely negotiate better loan terms since it will seem less risky to lenders.
The more prepared your business is for borrowing, the easier it will be to get funding and the more your business can maximize its impact.