How to determine your business financing needs and pick the best option

Most businesses could do better with extra money. But figuring how and when it’s a good idea to seek financing is another matter.

Understanding your financial needs is the first step toward narrowing down your financing options — or whether you need financing at all. We guide you through the preliminary steps to steer your business to the right path.

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Five questions to determine your business’s financial needs

To decide whether your business needs outside financing, ask:

1. Is my business doing well? Although it sounds counter-intuitive, It’s generally a bad idea to look into financing — especially loans — if your business is struggling. Not only will you not qualify for many financing options, but you also risk getting caught up in a cycle of debt if you can’t repay the loan.
2. Are some seasons more profitable than others? Among the few times financing could be a good option for a struggling business is when it suffers seasonal losses. Access to extra funds can keep you afloat in the off-season until sales pick up and you’re able repay it more easily.
3. Do I need to build my credit? Consider taking out a small loan you’re certain you can repay. By building up your business’s credit score, you’ll get better rates on future loans.
4. Am I ready to expand? Business financing can be that extra push to making your business more profitable in the long run. But make sure you’re ready for that kind of growth.
5. Can I afford to buy all the equipment I need to run my business? If a lack of equipment is holding you back, it might be worth it to look into business equipment financing.

How to choose your best financing option

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 professions might want to look into opening a business line of credit for access to cash that covers day-to-day expenses when profits aren’t enough. And businesses in agriculture and manufacturing sectors could benefit from equipment loans to directly affect their profits.

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Name	Product	Filter Values	Loan amount	APR	Requirements
Biz2Credit business loans Finder Rating: 4.7 / 5: ★★★★★			$25,000 – $6,000,000	Starting at 5.99%	6+ months in business; $100,000+ monthly revenue; 500+ credit score	Get only the capital you need through secure, prescreened lenders with this highly rated company offering SBA, expansion, working capital and other loans.	Go to site More Info	Compare	loading Fetching your data…
Lendio business loans Finder Rating: 4.75 / 5: ★★★★★			$500 – $5,000,000	Starting at 6%	Operate business in US or Canada, have a business bank account, 560+ personal credit score	Submit one simple application to potentially get offers from a network of over 300 legit business lenders.	Go to site More Info	Compare	loading Fetching your data…
ROK Financial business loans Finder Rating: 4.7 / 5: ★★★★★			$10,000 – $5,000,000	Starting at 6%	Eligibility criteria 3+ months in business, $15,000+ in monthly gross sales or $180,000+ in annual sales	A connection service for all types of businesses — even startups.	Go to site More Info	Compare	loading Fetching your data…
OnDeck short-term loans Finder Rating: 4.6 / 5: ★★★★★			$5,000 – $250,000	As low as 35%	600+ personal credit score, 1 year in business, $100,000+ annual revenue, active business checking account	A leading online business lender offering flexible financing at competitive fixed rates.	Go to site More Info	Compare	loading Fetching your data…
Fundbox lines of credit Finder Rating: 4.2 / 5: ★★★★★			$1,000 – $150,000	Not stated	6 + months in business, $100,000+ in annual revenue, 600+ credit score	Get flat rate, short-term financing based on the financial health of your business, not your credit score.	Go to site More Info	Compare	loading Fetching your data…

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