Two people discuss a business loan while walking up stairs in a warehouse

As a midsize business owner, you may face internal and external factors that drive the need for investment in your company. When these needs arise, securing debt through business loans can be a viable option to fuel your growth. Consulting with your financial provider can help you understand when taking on debt is appropriate and what your best options may be. 

We explore the ways business loans can support your growth strategies and provide insights on having more productive conversations with your banker about strategic borrowing.  

When borrowing makes sense

While every business’s needs are unique, there are several common scenarios where securing debt through business loans can be a strategic choice to support growth. Here are a few examples:

Bridging a working capital gap

Landing a large new customer or managing seasonal and cyclical business swings may require you to build inventory, or it could create a lag in the time it takes to collect receivables and pay vendors. These situations can create a temporary cash flow gap due to payment terms. A working capital line of credit, secured by company assets, could be a potential solution.

Supporting business expansion

Expanding isn’t limited to physical properties. New equipment, automations, acquisitions or enterprise resource planning systems may all require funds that you don’t have on hand. Equipment loans or asset-based loans, supported by cash flow, are potential solutions to consider.

Funding a business transition

If a partial owner wishes to exit, creating the need for a buyout, leveraging company assets to finance the ownership change using cash flow to service the debt could be a viable approach.

Preparing for productive conversations with your banker

Before engaging a financial provider in conversations about securing debt, you should:

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    Clarify the purpose of the loan

    Ensure the loan is being used for productive purposes that generate returns greater than the borrowing cost, such as investing in equipment, expanding operations, hiring more talent or launching new products and services. View your assets in relation to their liabilities; that way, you can determine if the debt will increase your long-term growth prospects.

“Clarity in borrowing can drive the path to growth. Define the purpose of the loan, then allow your banker to identify and advise on the most effective debt solution. This can lead to business debt being part of the foundation that enables your business to thrive.”


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    Strengthen your financial statements

    Financial statements beyond tax returns help assess your ability to take on debt based on your current and projected cash flow, profitability and assets. A CPA can review your financial statements and give you and the lender confidence in your ability to service the debt comfortably.

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    Demonstrate your ability to service debt

    An accurate cash flow and cash forecasting model should showcase your company’s ability to service existing and proforma debt with future cash flows.

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    Identify assets for collateral

    Have an accurate, preferably audited, valuation of your business assets, particularly if you’re considering asset-based lending.

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    Consider personal support if needed

    In some cases, a personal guaranty from you as a business owner pledging personal assets may enhance the debt opportunity. Your financial provider should advise if this step is necessary.

Collaborating with your banker for long-term success

A debt-capacity analysis is a powerful collaborative tool. Conducted with your banker, this analysis provides a full financial picture of current and historical financial performance, cash flows, assets and projections. This enables your banker to work with you on the “art of the possible.” 

“Ongoing conversations with your banker are crucial to explore potential opportunities and plan for the future. Don’t wait until financing is needed to start the dialogue. Regularly revisit the ‘art of the possible,’ as lending climates and business performance can change.”

At JPMorgan Chase, we’re here to support you at every stage of your business journey. Our insights and solutions are designed to help you anticipate what’s next and navigate the evolving business landscape. Let’s work together to build your future, unlock your potential and achieve your growth aspirations.

JPMorgan Chase Bank, N.A. Member FDIC. Visit for disclosures and disclaimers related to this content.

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