Funding Seasonal Business Cycles

Before choosing funding, map your cash flow cycle in detail:

Cash Flow Mapping Exercise: For each month of the year, estimate:

• ●Revenue expected
• ●Major expenses (rent, payroll, inventory)
• ●Net cash position

Identify:

• ●Peak months: When cash is strongest
• ●Valley months: When cash is tightest
• ●Transition months: Building up to peak or winding down

Common Seasonal Patterns:

Retail/E-commerce:

• ●Peak: November-December (holiday)
• ●Valley: January-March
• ●Prep: September-October (inventory investment)

Landscaping/Lawn Care:

• ●Peak: April-October
• ●Valley: November-March
• ●Prep: February-March (equipment, marketing)

Tourism/Hospitality:

• ●Peak: Varies by location (summer, ski season, etc.)
• ●Valley: Off-season months
• ●Prep: 1-2 months before peak

Construction:

• ●Peak: Spring-Fall (weather dependent)
• ●Valley: Winter months
• ●Prep: End of winter (bidding, planning)

Tax/Accounting:

• ●Peak: January-April, September-October
• ●Valley: May-August
• ●Prep: Year-round client development

The Key Insight: Your funding strategy should anticipate, not react to, seasonal patterns.

Choose products that naturally accommodate seasonal variation:

1. Merchant Cash Advance Why it works seasonally:

• ●Payments automatically decrease when sales are slow
• ●No fixed monthly payment to meet during valley
• ●Fast access when opportunity arises

Best for: Retail, restaurants, tourism businesses with card sales How it helps: Slow Tuesday in February = tiny payment. Busy Saturday in December = larger payment.

2. Business Line of Credit Why it works seasonally:

• ●Draw during slow season to cover expenses
• ●Repay during peak when cash is strong
• ●Only pay interest on what you use

Best for: Any seasonal business How it helps: Bridge the gap between expense timing and revenue timing.

3. Revenue-Based Financing Why it works seasonally:

• ●Payments tied to monthly revenue
• ●Automatic flexibility built in
• ●No strain during slow months

Best for: E-commerce, subscription-based, service businesses How it helps: If revenue drops 50%, payments drop proportionally.

4. Seasonal Payment Structures Some lenders offer:

• ●Payment holidays during known slow months
• ●Lower payments off-season, higher during peak
• ●Balloon payments timed to post-peak cash

Ask about: "Do you offer seasonal payment structures?"

Products to Approach Carefully:

Fixed monthly payment loans:

• ●Must be sized so you can pay during slowest month
• ●Leaves money on table during peak months
• ●Consider only if payment is truly manageable year-round

Very short-term products:

• ●If payback period falls entirely in slow season, dangerous
• ●Ensure payback timeline includes peak season

When you apply significantly impacts approval and terms:

Best Time to Apply: During or Just After Peak Season

Why:

• ●Bank statements show strongest revenue
• ●Lenders see your business at its best
• ●Better terms based on demonstrated performance

Strategy: Apply in your strongest month, even if you don't need funds immediately. Establish the relationship for when you do need it.

Second Best: Approaching Peak Season

Why:

• ●Lenders know busy season is coming
• ●You can show contracts, bookings, or orders
• ●Funds arrive in time for seasonal prep

Example: Landscaper applies in February showing signed spring contracts.

When to Avoid: Deep in Slow Season

Why:

• ●Bank statements at their weakest
• ●Lenders see lowest revenue period
• ●Worse terms or potential decline

If you must apply during slow season:

• ●Lead with your annual picture, not recent months
• ●Show year-over-year comparisons
• ●Provide upcoming contracts or bookings
• ●Explain seasonal pattern proactively

Pre-Season Funding Strategy: Best approach for seasonal businesses:

1. ●Apply during peak season when statements are strong
2. ●Secure approval/line of credit
3. ●Draw when needed during slow season
4. ●Repay during next peak

This way, you're evaluated at your best and funded when you need it.

Funding is part of the solution, but cash flow management completes the picture:

Build Reserves During Peak: Set aside a percentage of peak revenue specifically for slow season:

• ●Minimum: 10% of peak revenue
• ●Better: 15-20%
• ●Best: Enough to cover entire slow season expenses

Automate it: Transfer to separate savings account immediately when you receive peak revenue.

Know Your True Break-Even: Calculate monthly minimum needed:

• ●Fixed costs (rent, insurance, debt payments)
• ●Minimum staffing
• ●Essential operating expenses

This is your slow season target—can be below normal operating level.

Manage Expenses Seasonally: Adjust your cost structure:

• ●Variable staffing (seasonal workers, reduced hours)
• ●Inventory management (don't carry excess into slow season)
• ●Marketing timing (heavy before/during peak, light during valley)
• ●Postpone non-essential expenses to peak season

Use Credit Strategically: Line of credit during slow season:

• ●Draw minimum needed, not maximum available
• ●Have clear repayment plan tied to peak
• ●Track utilization and cost carefully

Generate Off-Season Revenue: Consider:

• ●Related services (landscaper doing snow removal)
• ●Maintenance/off-season specials
• ●Gift cards sold for future use
• ●Annual contracts paid upfront

Detailed guidance for common seasonal industries:

Landscaping & Lawn Care: Peak: April-October | Valley: November-March

Funding strategy:

• ●Equipment financing: Apply in fall, acquire in winter, deploy in spring
• ●Line of credit: Establish in summer, draw in winter if needed
• ●Working capital: Secure pre-season for marketing and early expenses

Cash flow tips:

• ●Offer prepaid annual contracts at discount
• ●Snow removal services in winter
• ●Holiday lighting installation

Retail (Holiday-Focused): Peak: November-December | Valley: January-March

Funding strategy:

• ●Inventory financing: Apply September, receive October
• ●Line of credit: Draw for inventory, repay January-February
• ●MCA: If card sales strong, payments naturally high during peak

Cash flow tips:

• ●Extended return period ends in January (manage returns)
• ●January clearance sales to move inventory
• ●Valentine's Day/spring prep in February

Tourism & Hospitality: Peak: Varies | Valley: Off-season

Funding strategy:

• ●MCA: Payments flex with guest volume
• ●Seasonal line of credit: Cover off-season operations
• ●Equipment financing: Time payments to high season

Cash flow tips:

• ●Prepaid packages and gift certificates
• ●Off-season maintenance and upgrades
• ●Weddings/events in shoulder seasons

Construction: Peak: Spring-Fall | Valley: Winter

Funding strategy:

• ●Invoice factoring: Convert completed work to cash immediately
• ●Equipment financing: Acquire in off-season at better prices
• ●Line of credit: Bridge between project completion and payment

Cash flow tips:

• ●Progress billing on larger projects
• ●Retainer agreements with regular clients
• ●Interior work during weather-limited months