To borrow money, or not to borrow money? It's an important question and, if we're being honest, there really isn't an easy answer. It totally depends on your unique situation.

But there is good news: this blog will give you the tools you need to make the decision with confidence.

We'll explore the question, “when is the right time to seek outside funding?” and how to go about it once you've decided that an injection of capital is definitely necessary.

Let's get started!

When to Borrow Money for Your Business

Is now the right time for your company to borrow money? How about next year, or the year after? To know for sure, you have to look at the two primary reasons businesses accept outside capital in the first place: they need it to keep the lights on, or there’s an opportunity they want to take advantage of.

Let's drill down into each of these reasons.

Evaluate Your Need

How badly is your company in need of funds? Take a realistic look at your situation and evaluate it honestly. This is an important first step. You need to tread carefully and proceed with caution.

Ask yourself what the next few months will be like if nothing were to change. How would your outlook shift if you got a loan? Digging deeper, how big of a loan would you need to remedy your current money issues?

Once you have a figure in mind, you can assess how long it will take you to recover and what terms you'll realistically be able to afford in the meantime.

Does that seem like a lot of questions? Well, we're not done yet. To accurately gauge your need for funds, ask yourself what other solutions are currently being implemented to solve your cash problems. Will an injection of capital assist those measures?

By answering these important questions, you should be able to come to a conclusion on whether or not your current need for money is strong enough to seek a loan. If it's not, you need to rethink your strategy.

Evaluate the Opportunity

As a business owner, you're likely ambitious by nature. You see an opportunity and you want to capitalize on it. But what if you don't currently have the funds to do so? A business loan may be worthwhile, but you need to thoroughly investigate the situation.

Ask yourself these important questions:

• Will this borrowed money generate more money? If so, how much?
• What are my margins and is there any potential for unforeseen costs?
• How quickly can I make this happen and what might stand in the way of my business borrowing capital?

After answering these questions, you'll be much more prepared to answer the question, "Does this opportunity make sense for my business?"

If it does, you’ll want to begin the borrowing process. Here’s how: