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.

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 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.

Compare top business loan options

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Name	Product	Filter Values	Loan amount	APR	Requirements
First Down Funding business loans			$5,000 – $300,000	Fee Based	At least 1 year in business, an annual revenue of $100,000+, and a minimum credit score of 400	Alternative financing up to $300K with highly competitive rates.	Check eligibility More Info		loading Fetching your data…
Lendio business loans			$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.	Check eligibility More Info		loading Fetching your data…
ROK Financial business loans			$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.	Check eligibility More Info		loading Fetching your data…
OnDeck small business loans			$5,000 – $250,000	As low as 9.99%	600+ personal credit score, 1 year in business, $100,000+ annual revenue	A leading online business lender offering flexible financing at competitive fixed rates.	Check eligibility More Info		loading Fetching your data…
Rapid Finance small business loans			$5,000 – $1,000,000	Fee based	Steady flow of credit card sales, bad credit OK	Check eligibility More Info		loading Fetching your data…
Fundbox business loans			$1,000 – $100,000	4.99	You must have an established business.	Get flat rate, short-term financing based on the financial health of your business, not your credit score.	Check eligibility More Info		loading Fetching your data…
Kickpay e-commerce business loans			$20,000 – $1,000,000	Not applicable	At least $250,000 in the past 12 months of revenue, e-commerce business, use a 3rd party fulfillment center for storing and shipping inventory, at least one US location.	Get a loan for your e-commerce business based on your sales history.	Check eligibility More Info		loading Fetching your data…
LendingClub business loans			$5,000 – $500,000	12.15% to 29.97%	12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better	With loan terms that vary from 12 to 60 months, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.	Check eligibility More Info		loading Fetching your data…
Monevo business loans			$500 – $100,000	3.99% to 35.99%	Credit score of 500+, legal US resident and ages 18+.	Use this connection service to get paired with a loan you can use for business.	Check eligibility More Info		loading Fetching your data…

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