For entrepreneurs operating seasonal businesses, there will always be periods of highs and lows when it comes to revenue. Expenses can be difficult to keep up with during months where sales are low, but the expense are usually necessary for the growth and operations of the business. During low seasons, it can be necessary to obtain small business loans for seasonal businesses. These loans can help offset the costs associated with keeping the business afloat during non-peak sales quarters.
What can owners do to acquire small business loans for seasonal businesses?
It can be difficult for any small business, let alone seasonal businesses, to land outside funding. Small business lenders often consider seasonal businesses riskier than companies that operate with a steady stream of revenue year-round. There are various reasons as to why that is. For example, small business lenders might deny seasonal businesses of regular loans because they must be paid in monthly payments. Depending on the business and the amount of the loan, this may not be possible and therefore deters lenders from approving the seasonal business’ loan application. Seasonal businesses don’t typically have sustainable revenue during off-season periods that is needed to keep up with the fixed monthly payments of small business loans.
What other loan options are available for seasonal businesses?
Seasonal business loans, or short-term loans, can help meet the short-term needs of seasonal companies. A seasonal business loan can help a small business owner manage and project cash flow through high and low sales months. Additionally, small business owners can utilize short-term loans to cover unexpected expenses or to grow their business.
The benefit to using a short-term loan means that it isn’t necessary to cut business expenses. This is extremely helpful during off seasons when small businesses are already on tight budgets. Seasonal business loans are also useful for making purchases needed to perform a service before the business has enough revenue from peak season sales. For example, a contractor in Boca Raton, Florida may have the majority of his revenue coming in the summer season when hurricanes and tropical storms are most likely to strike. However, his company has just secured a large contract with a client that is paying a hefty sum upon completion of the work, but it will require tools and personnel that he doesn’t currently have.
This is a time where the contractor may reach out to a small business lender, like Fast and Easy Funds, to obtain the needed capital to purchase supplies. With a purchase order in hand and a designated date of completion of the services, lenders are likelier to approve the application. Though short-term loans offer advantages, there are some drawbacks to take into consideration as well. With standard small business loans, applicants will have to pay the loan off in monthly installments. Seasonal loans on the other hand, usually require a lump sum to be paid by a specific date. In addition, seasonal business loans often have higher interest rates than standard small business loans. Call Fast and Easy Funds today to learn more.