Many businesses across the United States experience fluctuations in sales throughout the year. These companies are known to have seasonal business, a status that is determined by the type of product or service offered and the time of year in which that product or service is sought after by the general public.
If you’re running a seasonal business, cash flow lessens certain times of the year, but your business expenses do not. You need overhead to stock your inventory, hire seasonal personnel, and most importantly, keep the lights on. In addition, vendors require payment at the end of the season, when your working capital is significantly less.
The question is – how can your seasonal businesses remain profitable? The answer – seasonal business financing. These short-term business loans provide a number of benefits to seasonal businesses, including:
- Managing and projecting cash flow throughout the fiscal year is simpler. Contrary to popular belief, a business’s off time still requires money to keep the operation afloat. A company’s down time is ideal for having maintenance done on equipment, restocking inventory, and upgrading materials, all of which cost money. Seasonal loans make up for the lack of income generation and allow for more accurate cash flow forecasts.
- Dealing with emergencies becomes less stressful. Natural disasters, Acts of God, and accidents happen. Seasonal businesses are susceptible to this fact, and seasonal loans can prove vital for these companies to have some amount of money on hand that can cover emergency expenses during the off season.
- Payback is less detrimental. Traditional bank loans require steady monthly payments, something that seasonal business owners cannot afford to do with a lack of income. With a seasonal loan, you can choose the option that best fits your ability to pay the bank back:
- Term Loan: Like a mortgage, you borrow a certain amount and agree to pay it back over a set period of time, with interest charged at a variable or fixed rate.
- Working Capital Loan: This option allows you to maintain cash flow, but often require repayment in a shorter period of time.
- Merchant Cash Advance: For businesses that accept credit and debit cards, you may borrow against your future receipts and commit to paying a percentage of your daily credit and debit sales. Interest payments are often fairly high in this repayment plan.
- Business remains booming. Seasonal business loans can be used for a multitude of purposes, expanding on your product or service offerings, hiring more staff, or handling emergencies and unexpected expenses.
Whether you own a nursery or run a snow plowing operation, Liberty Financial can help you obtain the financial support your seasonal business needs. Contact us today for more information.