Professional Business Plan Specialists

Reach new heights

News And Articles

When Is The Best Time To Borrow Money For Your Business?

When Is The Best Time To Borrow Money For Your Business?

Table of Contents


One of the biggest challenges facing small business borrowers (and lenders) is that too many business owners wait until the need for financing is critical before they start looking. Taking a more strategic approach, and seeking financing before the need becomes a crisis, could make the borrowing process less stressful and more successful. It’s sometimes said the best time to borrow is when you don’t really need to, but it’s not accurate and could be considered an oversimplification, but anticipating future financing needs early makes a lot of sense.

Planning for Future Financing Needs

While it’s difficult to foresee every potential financing need over the next 12 or 24 months, business owners who take a more proactive approach to planning generally, have a better idea of the new equipment they might plan to purchase, their potential staffing requirements, anticipated expansion plans, or other financing needs – all of which could potentially benefit from additional borrowed capital. Planning in advance also allows the business owner to fully investigate his or her options to ensure they find the best solution for their current situation. Because the SME Funding Landscape has changed so much over the last several years, borrowers need to become more aware of their available options and discern which alternatives might be the best fit for their businesses and current needs.

Is the Business Ready for Financing?

Additionally, advance planning gives a borrower time to honestly evaluate their current circumstances to determine if a loan makes financial sense for their business. Is their credit profile in good shape? Is it up to date? Is it accurate? If not, what steps does he or she need to take to make improvements or correct mistakes? Does the business have sufficient cash flow to meet the required periodic payments? Or would the burden of those payments put too much strain on the business?

The current situation will directly impact the financing options a business owner may or may not be able to access today. Evaluating the situation makes it possible to prepare and streamline the process of finding a loan, and increases the number of potential loan options they have available, down the road.

It might also suggest the need to modify the plan and forego financing in the near term in favour of a better and more improved situation down the road.

If I had that, I wouldn’t need a loan.

The most successful business owners look at financing in the same way they look at other business tools. Financing should never be used to metaphorically “roll the dice,” but is rather a way to make strategic investments in a business to facilitate growth and increase the value of that business. A strategic and proactive approach to small business borrowing allows the business owner to access borrowed capital before it is a critical “need” and makes it possible to effectively use it to encourage growth. In other words, looking at your financing needs the same way you would look at other resource needs helps avoid making bad decisions in a crisis and allows the business owner to use borrowed capital to fuel growth and build a healthy business, rather than simply survive.

After evaluating your business, if it doesn’t make sense to borrow, a strategic approach allows the business owner to modify plans, postpone big initiatives, or forego expansion in the short term, in order to position the business for greater success a little further into the future.

In reality, if the business “needs” the loan to survive, there are larger issues that should be addressed in a regular strategic planning session; and gambling with a business loan could likely result in kicking the can down the road a little further and creating a bigger crisis in the future.

So when’s the best time borrow?

Before the need is critical and when it strategically makes sense.

Established in 2006, we have successfully written more than 12,500 Professional Business Plans for clients across 25 countries. As South Africa’s Leading Business Plan Company, we are confident that we would be able to assist you too. Kindly note that we also offer “Investor Pitch Decks”, “Excel-based Financial Models”, and “Proposal/Tender Writing Services” in addition to our Custom Business Plan Writing Service. Please visit our Services page for more information.

We look forward to being of service to you. Please feel free to contact our Founder, Dr Thommie Burger, on +27 79 300 8984 should you have any questions. He is also available via email and LinkedIn.

JTB – Your Business Planning Partner.

Share this article…

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

Recent Articles

Business Plan

The Business Plan and 4 Superb Philosophies when Writing One

Creating a new business is a process fraught with difficulty and failure and many businesses fail in the first twelve months of trading.
Most businesses operate in competitive markets: They have to compete against and out manoeuvre competitors in order to answer the question of how they will gain market share and establish a competitive advantage. Not all organisations arrive at the same answer and for good reason.


Buying a Business vs. Startups: 12 Possible Reasons Why One is Better

Before I start off, let me be upfront by saying, 99% of would-be entrepreneurs out there do not have the funds to buy an existing business. But, in an ideal world, if you do have the funding available, it would be worthwhile to look at the reasons why buying a business is an easier path to becoming your own boss than starting from scratch. So why should you buy a business versus start your own?

Investor Questions

Investor Questions – 10 Critical Questions You Will Be Asked When You Seek Funding

Investor questions are dreadful to new startups. Entrepreneurs need to be prepared when pitching their start-up companies to investors by anticipating the questions they will receive. Presenting to potential investors will involve as little as 10 questions and as much as 100 questions. We have focused on the Top 10 Most Common and Most Difficult Questions that entrepreneurs can expect when presenting their Business Plan.

Startup funding

Startup Funding and 8 Costly Mistakes to Avoid

Startup funding is perhaps the greatest challenge to new companies. Startup companies are faced with many challenges, and one of these are securing funding. Securing and managing funding can be one of the most exciting – and nerve-wracking – parts of being an entrepreneur.

Subscribe to our newsletter.

Stay informed and opt-in for our newsletter via email. We respect your privacy and we never spam.