The Best Time to Get a Loan? When You Don’t Need One

One of the greatest ironies in finance—both for businesses and individuals—is that banks are eager to lend you money when you don’t need it, but when you actually do, they suddenly become risk-averse.

I’ve lived through this reality firsthand, both in my business and personal financial life. Early in my entrepreneurial journey, we were profitable, cash flow was strong, and banks were practically throwing loan offers at us. But we didn’t need the money, so we didn’t take it. Then, a year later, things tightened up. Sales were slower, expenses were higher, and cash flow was inconsistent. Suddenly, we needed financing—and those same banks that had been so eager before? Now they weren’t interested at all.

The same thing has happened to me personally as well. As an entrepreneur, my income has historically been erratic—some years are great, others less so. I quickly learned that banks don’t like inconsistency. If I was making steady money, they were happy to extend credit. But in years where income dipped, even if I had strong assets and a solid financial history, they wanted nothing to do with me.

This is a game that both business owners and individuals need to learn how to play. The best time to secure financing is when you don’t need it.

Why Banks Only Lend When You’re Strong

Banks don’t like risk. When you apply for a loan, they want to see:

• Stable income – Can you comfortably make the monthly payments?
• Good credit – Do you have a strong history of managing debt?
• Collateral – If things go south, do you have assets they can seize?

When business is booming or personal finances are strong, you check all these boxes. But when you’re struggling—when you actually need the money—you suddenly become a risky borrower in their eyes.

This is why so many small business owners and individuals face the frustrating experience of getting approved when they don’t need money and rejected when they do.

How to Play the Loan Game Smartly

Since banks are only generous when you’re financially strong, you need to be proactive about securing financing when you’re in a good position. Here’s how:

1. For Business Owners: Establish Credit During Good Times

• Set Up a Business Line of Credit (LOC) – A business LOC works like a credit card but with lower interest rates. You can borrow when needed, and interest is only charged on what you use. This can be a lifesaver during slow seasons.
• Apply for a Term Loan When Profitable – Even if you don’t need the money right away, securing a loan while your financials are strong ensures you have access to cash when you do need it.
• Build Relationships With Lenders – Instead of applying for a loan out of desperation, establish a relationship with your bank when things are going well. That way, they know you before you need funding.

2. For Homeowners: Use a HELOC as a Financial Safety Net

If you own a home, a Home Equity Line of Credit (HELOC) is one of the best ways to secure future funding. A HELOC allows you to borrow against your home’s equity, giving you access to cash when needed.

Why HELOCs are great: ? You only pay interest on what you use. ? Interest rates are typically lower than credit cards or personal loans. ? They can provide emergency liquidity for personal or business use.

Many homeowners don’t realize how powerful a HELOC can be as a financial backup plan. If you wait until you’re in financial trouble, you might not qualify. But if you set one up while your income is strong, it can serve as a safety net when you need it most.

3. Keep Strong Financial Records

• Whether you’re a business owner or an individual, keep your financial documents organized. Banks love consistency. Even if your income is variable, showing them a well-documented history of earnings, savings, and responsible debt management can help improve your chances of approval.

Final Thoughts: Be Prepared Before You Need It

If there’s one thing I’ve learned, it’s that financial preparation beats financial desperation every time. The best time to apply for a loan, secure a line of credit, or set up a HELOC is when your finances are strong—not when you’re scrambling for cash.

If you’re a business owner, take advantage of the good times to establish financing options before you actually need them. If you’re a homeowner, consider setting up a HELOC now so that you have access to funding when life inevitably throws a curveball.

Because in the world of banking, money is offered to those who don’t need it—and withheld from those who do. Play the game wisely.