Business Financing
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When Will Business Financing Be Required?

The timing for acquiring business capital is also very important. 

When targeting financing companies to potentially work with, this will be one of the first things you should be trying to qualify for yourself.  The reason for a quick initial review on both sides of the “when” capital is required is to see if the estimated review, approval, and funding process can potentially be lined up to the timeline of the business applying for incremental capital.

Too often there is a lack of a realistic assessment for comparing when funds are required and when they could be made available.  When this happens, the resulting delays can range from being a minor inconvenience to the business applying for financing, to being catastrophic in terms of real cost and/or opportunity cost, so it’s important to have an initial discussion around the “when”.

In many cases, the business will wait too long to start the process for locating and securing financing and assume that it won’t be too difficult or take too long to get the required amount of financing in place for the preferred terms. 

"In situations where capital is required quickly, just remember that lower cost money is slower moving money"

It’s not unusual for a business to plan some sort of capital expansion over a period of years, but leave the process of securing financing to almost the last minute due to expectation and belief that business financing will be easy to get into place. 

While that may be true in some cases, its not typical, especially for larger capital requests and more complex scenarios.

Further, if you want to compare and contrast financing options that are available to you, you’re going to need time to do that, otherwise time pressure could force you to take an available option that is likely not your best or preferred choice if time wasn’t a factor.

In the opposite scenario, when you need to get financing in place right away, its going to be important to be applying with finance companies that have the ability to not only provide you with an answer quickly, but are a potentially good fit for your financing requirements. 

In situations where capital is required quickly, just remember that lower cost money is slower moving money and if time is truly of the essence, it may make sense to focus on lenders that can give you what you need in the time you have, even if the cost of financing is slightly higher.

When these types of scenarios occur, there needs to be an immediate and realistic assessment of the potential trade off between a higher than expected cost of capital that is readily available and the actual business costs and estimated opportunity costs that will result from a delay in getting capital secured and funded.

The financing process should always start as early as possible to make sure the timing for completion has a good chance of aligning with your business timeline for implementation.

Once again, estimating the time it takes for the business financing process to complete can be extremely difficult, so start early to avoid unnecessary delays that could have significant financial impact on your business.  

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