7 Things to Know About Seasonal Business Loans

What is one thing to know about seasonal financing and business loans?

To help you learn about short-term business financing, we asked financing experts and business leaders this question for their best insights. From bearing in mind the high-interest rates to staying organized for better approval odds, there are several tips that may help you determine if seasonal financing is a good option for your small business. 

Here are seven things you should know about seasonal business loans: 

  • Prepare for Unexpected Costs
  • Bear in Mind the High-Interest Rate
  • Use It as a Business Line of Credit
  • Consider Seasonal Financing for Certain Industries
  • Stay Organized for Better Approval Odds
  • Watch the Fees
  • Try to Bring Down Your Balance Monthly


Prepare for Unexpected Costs

Unexpected expenses crop up all the time, and some of them are unavoidable. A leaking roof, a burst pipe, or an unexpected tax payment can all leave you scrambling to acquire the funds you require quickly. Some seasonal business funding options are available rapidly, with some lenders offering approval in as little as one day. When an emergency strikes, you’ll be glad you have it.

Allan Switalski, LendThrive


Bear in Mind the High-Interest Rate

One thing to know about seasonal financing and business loans is that seasonal loans have a high-interest rate. This is primarily because the loan amount is small. If you run a business that varies according to seasons, you may have to rely on seasonal loans. 

In case this is true for you, it is imperative for you to contact different lenders before taking a seasonal loan. This way, you can compare the interest rates of different lenders and finally borrow from the one who offers the best deal to you.

Jessica Robinson, The Speaking Polymath


Use It as a Business Line of Credit

A business line of credit is a great option! First, shop around lenders to find a reputable one where you can get approved. Once approved, they will set your credit limit, which you are free to use as you wish! There are also different types of business lines of credit, such as secured and unsecured. Talk to your lender about which is best for your business.

Brooke Wilson, Fabric


Consider Seasonal Financing for Certain Industries

One thing everyone should know about seasonal financing is that it’s great for businesses in specific sectors. These sectors tend to be businesses like hospitality, outdoor sport, agriculture, and tourism. With strong seasonal business cycles, these businesses can make larger payments during the high-season and lower payments during their off-season.

Justin Chan, June Shine


Stay Organized for Better Approval Odds

Make sure you have enough cash on hand to get through any slow periods. It’s critical to manage cash flow for lengthy sluggish times in any organization, especially in seasonal enterprises. 

Pay payments before you close for the season to reduce outstanding short-term debt. Prepare cash flow estimates for the coming year, quarter, and, if you’re in a bind, the coming week. 

You’ll end up obtaining data from sales associates, service reps, collectors, credit workers, and your finance department as part of the process. An accurate cash flow prediction may forewarn you of potential problems long before they occur.

When applying for a seasonal loan, demonstrate to potential lenders that you have procedures in place to manage inventory, employees, marketing, and other aspects of your business.

Axel Hernborg, Tripplo


Watch the Fees

Seasonal financing can be beneficial, depending on your business. It can definitely come in handy if you run a business that has higher profits during a particular time of the year because you can make bigger payments during your high season and smaller payments during the off-season. 

Make sure you pay attention to the interest rate you’re being charged, however. Nothing is worse than taking on debt you can’t afford.

Brittany Kaiser, Gryphon Digital Mining


Try to Bring Down Your Balance Monthly

A seasonal loan meets the short-term needs of seasonal companies. This type of financing is super helpful for businesses that have a busy season and a slow season where there is much less profit. The most important thing to be aware of is the APR. An average APR for this can range from 8% to 80%, depending on the lender. If you don’t bring your balance back to zero each month, you could accumulate a lot of debt in interest. My advice would be to keep an eye on this and make sure you’re not spending more than you can pay off.

Rani Hublou, WorkBoard


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