When Should a Business NOT Take Out a Business Loan?

When Should a Business NOT Take Out a Business Loan?

A good indicator that a business loan is not the right solution for a business is if a business is seeking a loan for expenses that it cannot cover, such as staff or overhead costs. If a business is not profitable and not in good health, and it requires additional cash just to stay afloat, that is typically a red flag when it comes to business financing.

Most lenders would look at businesses with positive cash flow that have recurring revenue and a steady track record as a prerequisite before issuing them a business loan.

Companies are all different and thus there exists a need for different business loan types to suit the different needs companies face. Find out what type of loan you need and if now is the right time to apply!

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Vlad Sherbatov

Vlad is the President and Co-Founder of Smarter Loans, Canada's original and largest loan comparison website. He is a passionate entrepreneur and business leader in the Canadian financial sector. He was selected as a 2019 Top 25 Leaders in Lending by the Canadian Lenders Association. Vlad is an author at Smarter Loans, and has been featured in publications like the Toronto Star and National Post, among others.