Editor's choice: First Down Funding business loans
- No prepayment penalties
- Competitive rates
- Works with bad credit and most industries
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.
To decide whether your business needs outside financing, ask:
The financial state of your business will largely determine your financing options. To avoid losing yet more money, struggling businesses should generally avoid financing options until they’re back on their feet. If your business is growing and you want to put more fuel in the fire to grow even faster, a business loan is a good option.
In addition, how seasonal your business is and the industry it’s in will impact which financing option you choose. For example, seasonal businesses might want to look into opening a line of credit for access to cash that covers day-to-day expenses when profits aren’t enough. And businesses in the agricultural and manufacturing sector could benefit from equipment loans to directly affect their profits.
Imagine this scenario: Michael opened a pizzeria next to a high school. He made more money than he could’ve ever imagined — that is, until summer arrived.
All set to go to the bank for a loan to cover overhead costs for the summer, Michael wanted to make sure it was the right choice for his business. After researching small business financing, he learned that a line of credit could be better for his pizzeria. With a business line of credit, he’d only take out what he needs, when he needs it — allowing him to better manage his debt.
Only needing $5,000 at the time, he took out a $10,000 line of credit with LendingClub to be safe. The line of credit came with an 8% interest rate, and Michael paid what he borrowed within the first few months of the school year as business picked up again.
Bottom line: Understanding your business’s needs is the first step to making a smart financing decision. You won’t be ready to compare your options if you aren’t able to narrow down the type of financing you’re looking for and why you need it.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.