Principis Blog

Seasonal Business Loans

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Degrees of Seasonality

Most businesses are subject to some degree of seasonality in their sales. The degree to which the season impacts the business can vary greatly however. For example, nearly all retailers look to the Holidays every year to boost sales and expect bad weather to negatively affect their business. The case becomes more extreme when you look at a restaurant on the beach or a snow removal company. In these more extreme cases, the business may not even operate year-round.

Cash Flow Concerns

In either case, varying cash flows make it difficult for small businesses to meet their financial obligation in the off-season and nearly impossible to make the investments necessary to prepare for the high season. In order for a company to grow, it must not only survive it’s slow seasons, but also make investments to improve or expand it's current operations to take full advantage when the customers come back. In most cases however, small business owners simply do not have access to the capital they need to expand or even survive in the off-season.

Seasonal Business Loans

Qualifying for a traditional business loan from the bank becomes even more difficult if you’re the owner of a seasonal business. Bankers typically look at the volatility of your cash flows as very risky. The Banks look for consistent sales that allow you to make your fixed monthly loan payment. Consistent year-round sales simply are not the reality for many small business owners.

The Solution

For a seasonal business, the ideal type of financing would be provided in the off-season and be paid back at a variable rate, depending on what your sales are, throughout the year. When months are slow, your payments would slow down as well. When you are in your high months, you pay down a little more on your loan. Unfortunately, bank don’t offer this kind of loan. Fortunately, at Principis Capital, we provide financing for small businesses that is flexible and ideal for seasonal businesses. To learn more, please visit us at www.principiscapital.com.