Why Financing Is For Needs, Not Wants

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I’ve heard many, many customer calls happen here at Direct Capital. Our finance managers are some of the best in the business, and they care about the customer. Period.

That’s why, on every call I’ve ever heard, our representatives are asking if the customer needs financing. That’s because obtaining financing is not something any small business should just do on a lark, like spending five bucks on an ice cream cone. Financing must be attached to a need.

I’m imparting this advice not to scare you away, because if you have a reliable and trustworthy financing partner, you should never be nervous, much less afraid. It’s just that a working capital loan or an equipment lease is not something you want to take on to pay for a project that might be non-essential for your business.

Why, you ask?

  • Financing is not free. You will be paying back leases and loans with interest, which means that eventually you’re going to need to pay back everything you’ve borrowed. That’s not an issue if you’re getting a new piece of equipment that’s going to save you money and improve the way you do business, because you should make that money and more. But it’s another thing if you’re going after a new stereo system for your store because it’s something you would like to have, because it’s not likely to add any money to your bottom line.
  • A working capital loan* can be used for a dizzying number of projects and ideas, which makes it a tempting option to turn to whenever you’re ready to tackle a new project. Again, though, think of why you might be turning to a working capital loan. For most businesses, it’s to finance something that they don’t have the cash on hand for, or an unwillingness to dip into cash reserves. Ask yourself: Is this project of importance or something that can wait until you have the cash to handle it?

Ultimately, financing should be a valuable tool in your toolbox, and a trusted finance partner provides a well of help that you can return to again and again. Just be sure it’s for a project you need.


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*Working capital not available in the following states: AK, DE, ND, VT