Every business proprietor probably dreams of regular, stable, month-to-month cash flow, with spare cash on hand to cover any expenses that may arise. The truth for most businesses, of course, is that sales in many cases are seasonal. One method to bridge the famines between the feasts is by using seasonal financing to normalize your money flow.
Use A Seasonal Business Loan To obtain Financing Whenever your Business Needs It Most
Technically, there’s no financial product known as a “seasonal business loan.” You will find, however, a number of ways to finance your business’s short-term, cyclical needs. Included in this are loans, credit lines, as well as business credit cards. What you’ll want to look for is money you can quickly access when it's needed after which repay once you can to have it off your books.
6 Reasons You may need a Seasonal Business Loan
Before we get towards the types of seasonal business loans you are able to tap to cover your seasonal shortfalls, let’s check out a few of the reasons you might need a seasonal business loan.
1) Meeting Payroll
Labor is usually one of the biggest expenses for just about any business. Although some businesses might be able to pull off having seasonal staff, that’s often not the best way to retain talented and reliable personnel. Even if you have seasonal staff, you may want to hire them in advance of your seasonal peak, before you have the revenue to pay for salaries. A seasonal business loan can help you hire and retain talent.
2) Off-Season Repairs
Whether through planning or bad luck, sometimes repairs and maintenance have to happen when your company isn’t everything busy. Perhaps a key device broke. You may wish to redo your storefront. Regardless, you may need additional funds to cover the expense.
3) Buying Inventory
If your busy season is looming, and you sell an item rather than a service, you’ll probably need to fill up in advance. If you’re coming off a slower season, you may not have the funds open to cover the inventory you need. You don’t wish to miss out on sales because you’re sold out.
4) Advertising
Need to stoke the fire when preparing for your busy season? Would like to try getting more business during the off-season? You may need to do some advertising. When you probably don’t wish to go overboard, a well-placed campaign can produce a huge difference in your sales. If you want money to cover it, you might want to consider using a seasonal business loan.
5) Planning Ahead
Some types of seasonal funding can serve as an “insurance” policy of sorts. With a credit line or a business charge card, you can have money at the ready for unanticipated expenses.
6) Normalizing Your Cashflow
Most of the month-to-month expenses probably don’t disappear whenever your revenue is low. Some businesses might find it helpful to use a short-term financial product to help keep all of their expenses current.
Best Types Of Loans For Seasonal Business Needs
So you’ve determined that you need some type of seasonal business loan. Now let’s look at the types of lending options and services that can help you meet your seasonal expenses.
Short-Term Loans
If you’ve looked at any online lenders, there’s an excellent chance you’ve seen an advertisement for a short-term loan. These financing options are a little bit different than the typical term loan you might get from the bank. They’re designed to stop wasting time, which applies to everything from the application to the repayment process. Most short-term lenders can drop a proper lump sum inside your account within a few business days if you’re approved. Repayment usually begins immediately, with regular payments deducted automatically from your business account either each business day or weekly. The term period of a short-term loan generally is a year or less.
If you'll need a relatively large chunk of cash quickly and can handle the repayment schedule, short-term loans are an easy way to get your hands on working capital.
Lines Of Credit
A line of credit is like a loan you might or might not use. Or you will just use part of it. Should you successfully obtain a credit line, your lender will extend a specific amount of credit. The dpi is your borrowing limit. For as long as your credit line is active, you are able to draw money from it so long as the total amount you’ve borrowed doesn't exceed your credit limit. Generally, you’ll only pay interest on the amount of credit you’re using.
Lines of credit are ideal for seasonal businesses that desire a type of “day you need it fund” for unexpected expenses. Most credit lines are revolving, and therefore while you eliminate them, your credit opens up to use again. Seems like much like a charge card, that’s because charge cards themselves are a form of revolving credit. Having said that, a non-credit card line of credit will often be better to make larger purchases that you simply can’t repay within 20 days.
Business Credit Cards
And speaking of business credit cards, they're also a valuable way to bridge the space between your boom months. Business charge cards are similar to personal charge cards, except they have a tendency to possess bigger reward programs. Additionally they lack some of the legal safeguards associated with personal charge cards, so if you’re likely to rely on them, make sure you don’t enter over your head.
When the use of them? Business a credit card has a narrow application, but inside their niche, they can actually save you money. The key is to never carry a balance. By that, we mean you need to pay your card off entirely during the interest-free credit grace period offered by your issuer. You’ll collect points without accruing any interest! This will make business credit cards well suited for smaller, short-term expenses.
Equipment Financing
Equipment financing covers a massive swath of products which includes both loans and leases used to acquire hard assets. While many of these are potentially useful, of particular interest to seasonal businesses could be the operating lease. Should you only need a piece of equipment for area of the year, it may make more sense to rent it than to purchased it. Operating leases can be a fantastic way to get your hands on up-to-date equipment when you need it, without being burdened by long-term upkeep and repairs.
Where You'll find Seasonal Business Loans
Ready to look for a seasonal business loan? If you have an idea of what type of product best fits your requirements, you can check out our best-of guides that will help you compare your choices.
- The Best Small company Loans: Top Picks For Every Kind of Business
- The Best Business Credit Cards
- The Best Lines Of Credit For Small Businesses
