Last week, we covered an appearance that OnDeck CEO Noah Breslow made on MSNBC, discussing how business owners can prepare before they apply for a loan. This week, we detail another set of tips he offered to small business owners: when is the right time to turn to a bank for a small business loan.

1. If you’re a proven business looking for financing for a specific advancement
Only plan on applying for bank financing if you have a specific purpose, Breslow suggests. He told the news outlet that it’s easy for banks to calculate the payoff on specific improvements to your business, making them more likely to offer a loan in those scenarios.

“A great example of a growth opportunity might be a restaurant that’s expanding its outdoor seating so it can serve more customers,” he said, “or a Lasik eye surgeon who might be investing in marketing to acquire more patients.”

2. You have an opportunity for significant savings if you get more financing
Another case where it’s good to go to a bank is when you need a loan to purchase products that have high profit potential in the near future.

“Imagine you’re an auto repair shop, and you get a discount on wiper blades,” Breslow explained to MSNBC. “But if you don’t act now, you don’t get to buy those wiper blades and mark them up and sell them at retail.”

3. You can’t keep up with the demand for the products you supply
If consumer demand for your products is outpacing the speed at which you can produce those products, you’re definitely a good fit for a bank loan. Additionally, if you need to higher seasonal workers to keep up with demand, a bank loan would certainly be applicable.

“Seasonal hiring is a great use of capital from a loan,” Breslow said.

4. You need to accommodate cash flow conversion cycles
Many businesses have “structural issues” that require working capital – such as a medical firm that needs to pay nurses for work they do prior to receiving insurance payments that cover the costs of that work.

“The faster [a] business grows, the more capital they need – great use for a loan,” Breslow said.

5. An “unexpected speed bump” occurs
Businesses would do well to turn to banks if they’re faced with an unexpected complication. For example, a pizza shop where the oven breaks, or a retail outlet that finds its entrance shrouded due to construction would both be organizations that may want to consider bank loans. However, Breslow also noted that this situation may be ideal for alternative small business financing support.

“If you can go to your bank, and you have a relationship, that’s a good option,” he concluded. “[But] that’s also a time where the convenience and speed of online lending might be a really good fit for your business.”

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