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Seasonal Funding Tips 101

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Running a business is referred to as a balancing act. A roller coaster. A game of pinball. Like raising a child. Those metaphors are all the more true when operating a seasonal business.

Sometimes a seasonal business operates year round but has a peak, other times it closes for several months before reopening. This unsteady revenue puts quite a strain on cash flow, requiring seasonal business owners to plan ahead, stick to a tight budget, and get creative with other sources of income.


Well, this all depends on what kind of funding you get and what you need it for. Short term loans or funding are best implemented right before the peak season kicks in because you will need a profit to pay back the money sooner. Short term loans are typically used for stocking up on inventory and hiring early staff, or even dealing with unexpected repairs that need immediate attention.

If you’re looking for funds to expand, remodel or some other long-term project that needs to be done when it won’t interfere with business, then a long term loan would be better suited for your needs, as long as your budget has accounted for payback months when little to no profit is coming in.

Uses for seasonal funding

  • Taxes
  • Payroll
  • Inventory and supplies
  • Product line expansion
  • Marketing and advertising
  • Monthly lease or rent payments
  • Loan or business credit card payments
  • Expansion & remodeling
  • Employee training
  • Equipment purchases or repairs

Calculating your return on investment

First things first, you’ll want to create a list of your baseline costs. These are the minimum operational expenditures required to keep the doors of your business open from month-to-month, which should be recorded on your income statement and balance sheet.

Then, start cash planning. Forecasting and budgeting your income and expenses will help you see the “big picture” and prepare for the ups and downs of a seasonal business. Knowing when funds will start to dwindle and when they pick up again will give you an idea of when to inject outside funding.

Finally, look at what you’re using the funding for. Will investing $20k in expanding your store generate $30k in additional revenue? Will putting $5k into marketing bring in $25k in business? Taking on funding to smooth out the cash flow of your seasonal business is a common and often necessary business practice, but it’s important to remember that funding is not free money and the working capital should be put to smart use.

How to get seasonal funding & what you need

You will definitely need strong in-season cash flow to show that your business is healthy at its peak. Other factors funders will look at are frequency of deposits and some semblance of business in the off season. If this is an option for your business model, you could open an online store, diversify your services, rent out assets, or another creative way to keep some cash flow going. You may not have to close your shop down but rather scale back drastically.

Another word of advice is to apply when strong not struggling. If you open up a line of credit when your business is healthy it will be easy to get approved, rather than applying at a low when your cash flow looks like it poses a risk.

Budgeting tips

Use the off-season down time to plan and organize your accounting Lease instead of purchase. Although you’ll pay more in the end, leasing can free up additional cash to run your business. Expect variable costs like returned items and late invoice payments Dust off equipment early on to see what needs repairs or replacing

When you make the bulk of your annual revenue during specific seasons, it’s crucial that you have a budget in place that will preserve working capital and get you through the slow seasons successfully. This budget should include both fixed and variable expenses.

Once you have a comfortable idea of what your finances look like 12 months a year, you can look for a plan that fits your tricky seasonal cash flow.

FundKite works with many seasonal businesses to help them grow during peaks and coast during dips. Apply now to speak with a funding specialist about how you can use an influx in cash flow to grow and expand your business!