Funding is treated as the default answer to almost every business problem, and it solves a narrow set of them: bridging a timing gap, buying an asset that earns more than it costs, or scaling something already proven. Applied to anything else, particularly a business losing money on every sale, borrowing accelerates the problem rather than fixing it.
There are cheaper answers that most owners skip on the way to an application.
Do not borrow into a broken model
If the business loses money at current volumes, more volume loses more money. Fix pricing, cost of delivery or the customer mix first, because those are the actual problem and they cost nothing to address.
A funder assessing you will reach the same conclusion, which is why applications from loss-making businesses are declined regardless of how well the plan reads.
Customers can fund you more cheaply than lenders
Deposits, staged payments and upfront payment for a discount are all working capital that costs no interest and requires no application. Most small businesses have never asked.
Chasing overdue invoices produces cash that already belongs to you. A business owed money is frequently applying for finance it would not need if it collected properly.
Consider what equity actually costs
Selling shares to cover working capital is the most expensive money available, because you give up a permanent share of everything the business ever earns to solve a temporary problem.
Equity suits businesses that must grow very fast to work at all. For most profitable small businesses, growing more slowly on your own revenue leaves you owning the business.
When funding is the right answer
A confirmed order you cannot fund, equipment that demonstrably increases output, a timing gap with a defined end, or an opportunity that will not wait. In each, the money produces the revenue that repays it.
If that link is clear, prepare properly: registration with current annual returns at the Companies and Intellectual Property Commission, tax compliance, records and quotations. Free help getting an application to standard is available through the Small Enterprise Development and Finance Agency.
Frequently asked questions
When is funding the wrong answer?
When the business loses money at current volumes. Borrowing into a broken model accelerates the problem.
What are the cheaper alternatives?
Deposits, staged payments, upfront payment discounts, and collecting overdue invoices, none of which require an application.
Why is equity expensive?
Because you give up a permanent share of all future earnings to solve what is usually a temporary problem.
When does funding genuinely make sense?
A confirmed order you cannot fund, equipment that increases output, or a timing gap with a defined end.
What is the test?
Whether the money produces the revenue that repays it. If that link is not clear, the application will fail anyway.
Originally published in February 2018. Updated September 2026 into guidance on when funding is the wrong answer for a business.
