02 Dec Quick Guide: Identifying the Best Time to Apply for a Small Business Loan
When is the best time to apply for a small business loan? It’s a simple question without a straightforward answer. Simply put, the best time to apply for a loan is specific to your business.
In most cases, it is dictated by your cash flow needs and financial situation. But there’s more to it than your business situation. Issues like seasonality and market trends often impact the best time to apply for a small business loan. As such, there isn’t just one answer. Though if we had to give you one piece of advice, we’d say that the best time to apply for a small business loan is before you absolutely have to have it. Once the need is an emergency you are more likely to accept less than ideal terms because you’re in a hurry to get cash.
Beyond trying to think ahead and avoiding panicked loan decisions, here’s a look at a few matters to keep in mind when figuring out the best time to apply for a small business loan.
Businesses all face some degree of seasonality. If you face a major rush at one time of year, you will want to think about timing your loan efforts to ensure you can put that money into growing your business. Perhaps you run a shop near the beach and do most of your business in the summer. You most likely won’t need a loan mid-summer when cash is coming in fast. But if you wait until late spring to get the loan, you may not have enough time to develop your business before summer rolls around.
When dealing with issues of seasonality, the best time to apply for a loan is typically during the slow season. At this time, you can use the loan to cover cash deficits and invest in forward-looking projects. That said, it can also be helpful to get a small loan early in your busy season to cover initial operating expenses as cash is starting to come in.
Consider Your Industry
The industry you work in has a heavy influence on not only your seasonal issues, but also on unique patterns in customer behavior. For example, a Lendio report explained that health care providers tend to get most of their patients in August. The back-to-school rush brings in customers, making the winter and early summer the best time to apply for a small business loan. In retail, the report explained, this same situation exists, but primarily around the holiday shopping season. In this case, the best time to apply for a small business loan is the spring or summer, giving you a chance to get ready for the seasonal buildup.
Issues of industry and seasonality are closely linked, and it’s essential to identify the specific timing issues that impact your business.
Some aspects of lending are completely unrelated to you and the industry your business operates in. Market conditions in the finance world often influence loan costs and terms. A NerdWallet study of Lending Club customers found that November is often the best time to apply for a small business loan, as the month featured the highest acceptance rates. Acceptance rates tend to also increase early in the new year.
Simplify Your Financing When You Apply for a Small Business Loan
Choosing the right time to get a loan is key for any business. That said, alternative lenders like QuickBridge make it easier to get small, short-term loans quickly, when you need them most. You don’t have to worry about applying for a loan weeks or months in advance, and you can get the right amount of funding, for the right purpose, at the right time. Visit our website to learn more.
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