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5 signs your business needs financing

March 1, 2019

Many small businesses use some form of financing to manage cash flow, secure expensive equipment and/or fund growth. You many think you’re being financially responsible if you’ve been wary of taking on debt, but you could actually be holding your business back. Here are 5 signs your business may need financing:

  1. Your cash reserves are running thin.While every business is different, having at least 90 days’ worth of cash in the bank is usually recommended. If you can’t last three months based on what you currently have in the bank, you might want to seek financing.
  2. You’re putting a lot on credit cards. Just like with your personal credit cards, if your business is using too much of its total available credit, it could hurt your credit score–and your chances of getting a more significant loan if and when you need one. Better to plan ahead and get right financing for your current business situation.
  3. Your tools, tech, or space can’t keep up with demand. If your ancient point-of-sale system is inflexible or slowing you down, your small ovens mean you struggle to turn out enough cupcakes to meet the post-lunch rush, or your coffee shop is bursting at the seams every morning, it might be time for an upgrade. This is exactly the kind of expense that loans were made for–they can pay off handsomely in the form of higher output and an ability to acquire and serve more customers.
  4. Competition is getting fierce. You don’t want to overreact when dealing with new, or newly successful, competition, but you will want to take action. Possible responses might include expanding your product line, staying open longer, or hiring more staff to ensure swift service. Any of those actions might require you to seek financing.
  5. You need more capacity. Maybe you just got a really big order, and you need to hire some temporary staff to meet the deadline. Or maybe you’re noticing that you’re selling out of bagels every day, and it’s time to hire another baker to keep up with demand. Adding more capacity is a great reason to take on financing.

If you’ve decided it’s time to take out a loan or another type of financing, you’ve got plenty of options. A traditional bank loan is likely to be the cheapest source of extra cash, but it can also take a while to get that cash into your account.

Marketplace lenders with online applications can get you cash within a couple of days, but you may end up paying through the nose for that convenience. If you’re a Clover customer, Clover Capital is another possible option. This program can advance you some cash based on your average credit card sales. Repayment is easy, and also based on sales, so you won’t get stuck with payments you can’t afford.

Seeking financing can be a great sign that your business is strong and ready to grow. Just like with your personal credit card, using financing responsibly can improve your business’s credit score and help you achieve your goals. Whatever your reason for seeking financing, be thoughtful about the financing type, amount, and timing–and rest assured that there are plenty of options available that will meet your particular needs.


Clover is sold by leading U.S. banks including Bank of America, BBVA, Citi, PNC, SunTrust and Wells Fargo. You’ll also find Clover at our trusted partners including CardConnect, Restaurant Depot, and Sam’s Club. For more information, visit us at clover.com.