Most entrepreneurs start with a “do-it-yourself” spirit—stretching every dollar, wearing every hat and reinvesting every cent they can into the dream. Often born of necessity, this bootstrapping approach makes sense early on.

However, self-funding has limits and there often comes a time when you can no longer fuel the growth you know is possible from your own pockets. When cash dries up and the pressure of covering expenses while trying to pay yourself is overwhelming, external capital—such as bank loans or lines of credit—becomes an attractive option.

But how do you know whether you are ready to explore those funding opportunities? Furthermore, how do you know if your business is even capital-ready?

These are questions I hear entrepreneurs ask all the time. In my role as Analyst, Small Business Deal Flow here at JumpStart, I assist clients on everything from identifying their service needs to exploring funding opportunities to providing value-added feedback.

Many challenges arise not because funding doesn’t exist, but because expectations, readiness, or repayment capacity haven’t been clearly defined upfront. In my experience, it’s important to have a full understanding of what capital is realistically available to your business before starting the process of engaging with lenders.

Capital readiness is about more than just being eligible for a loan. It’s a mindset. It means moving from survival mode into a strategy where you use every borrowed dollar to build something sustainable. A capital-ready owner isn’t just looking for cash; they have a clear vision of how that money will work for them, a plan for how it will be spent and the confidence that they can afford the repayment without losing sleep.

Before you sit down with a lender, you need to assess where you are and where you’re heading. You need to understand not only what capital you are looking for, but also what is realistically available to you and what strings are attached to those dollars.

Key Questions to Consider Before Applying:

Question 1: What is the specific purpose of the funding?

Never apply for capital “just to have it.” A clear objective is a prerequisite for most applications. Ask yourself:

• Are you purchasing equipment or inventory?
• Are you investing in marketing to scale production?
• Do you need working capital to stabilize cash flow?

Question 2: What return on investment do you forecast?

Your use of funds should drive measurable gains—increasing revenue, improving efficiency or building capacity. Ensure the funding provides a clear return for your business.

Question 3: How much do you need, and what can you afford to repay?

Estimate your total requirement and categorize costs as one-time or ongoing. This prevents borrowing too little and stalling growth, or borrowing too much and creating unnecessary debt.

It is also critical to understand what your business can afford. Loan approval does not equal affordability. Your cash flow must support repayment without straining day-to-day operations.

To help you map out your expenses and better understand how much funding you truly need, I have included an expense worksheet and a debt repayment schedule. These tools can help guide your decision-making and create a clearer picture of your financial capacity.