Does Your Business Need Financing? Four Checks Before You Apply

Jared Feldman is CEO and Co-Founder of Fora Financial, which has deployed more than $5 billion to over 55,000 small businesses across the United States over the past 18 years.

After more than 20 years in business lending, I’d rather an owner decide not to borrow than take money that doesn’t serve a purpose. Before you inquire about financing, pull together financial information, or pick a product, settle whether financing is the right move at all.

In our 2026 Business Insights Report, a survey of U.S. business owners, the most common reasons owners said they would borrow were business expansion at 45%, refinancing existing debt at 42%, and seasonal cash flow needs at 41%.* Unexpected expenses came in at 28% and inventory purchases at 24%. Each of those comes with a clear use for the money. Soft sales and thin margins don’t, so here are four checks to run before you borrow.

Know when your borrowed money starts earning

1. Is the need one-time or seasonal?

Financing works best for a need with a clear start and finish, like a new location, an equipment purchase, or a seasonal ramp-up. A business that needs the same money every month has a margin or payment-terms issue, and borrowing will cover it for a while without fixing it.

A landscaping company owner I know borrows each March to cover crews, fuel, and materials before spring contracts start paying. She has the timing mapped out. The first invoices go out in April, most of the season’s cash is in by June, and the borrowing is paid off by July. The need comes back every year, but it has a clear start and finish, and she plans around it.

If you need the same money every month, start with pricing, costs, and how quickly customers pay you.

2. Do you know when and how you’ll repay it?

Every borrowed dollar needs a date you plan to see a return. The first thing I want to see from any owner is the plan to pay it back, whether that’s an invoice, a signed contract, or a purchase order. If you can’t name when and how you’ll pay it back, you’re borrowing on hope.

A contractor we spoke with wanted financing to buy materials for a job he was sure would be signed “any week now.” We asked him when and how he would repay it, and he couldn’t say, because nothing was signed yet. We agreed he should wait. The contract closed about three months later, and by then he could point to the signed agreement and the draw schedule. Now there was a plan for repaying it.

If the date stays fuzzy, shrink the amount or shorten the horizon until it isn’t.

3. Will what it buys earn more than it costs?

Financing has a cost, and it should be weighed against what it gets you. You can put a number on equipment that lets you take larger contracts, inventory ahead of a busy season, or a hire who adds capacity. Work out what the extra capacity should bring in, then compare that with what the financing will cost over the same period. If the first number isn’t clearly larger, wait or borrow less. Before the money goes out, I want to know where the first dollar of return will show up. For a seasonal cash need or an unexpected expense there’s no new revenue to measure, so the comparison is between what the financing costs and what not fixing the issue would cost.

Before he bought a second press, a print shop owner worked out that the extra capacity should bring in about 11 more jobs a week at his usual margin. He set that against what the financing would cost over 18 months, and the second press cleared it comfortably. The first extra job shipped in week three. He knew where the first dollar of return would come from before he ever signed.

4. Do you have proof it will work?

Every business wants more customers, and paying to win them is one of the best reasons to borrow. What I look for is proof that the spending works, orders already waiting on capacity, ads that pay for themselves, or a second location in a neighborhood where the first has a line out the door. If you haven’t seen it work yet, test it small before you borrow big.

A restaurant owner wanted money for a renovation to fix slow weeknights. I asked how many covers she did on a typical Tuesday. When she pulled it, nothing suggested a nicer dining room would fill more seats midweek. She tested a new weeknight menu and different hours first, and the renovation dropped down the list.

Before you apply

If you can answer yes to all four, financing is likely the right move. If any answer is no, you’ve found the part to work on first.

Write the answers down before you apply anywhere. You’ll know whether to borrow, and if you do, you’ll know exactly what it’s for.

Fora Financial has deployed more than $5 billion to over 55,000 small businesses across the United States. If the four checks point to working capital, we can help. Apply in minutes with no hard credit pull. Decisions in as little as 4 hours. Funding in as soon as 24 hours. See what your business qualifies for at forafinancial.com.

*Respondents could select more than one option.