Building a twelve month funding plan

A twelve month funding plan is a one page calendar that shows where cash will run short, what you will buy, which product covers each need and when to apply. Most owners finance one emergency at a time. A plan lets you finance the year: a line of credit for the recurring gaps, term debt for the long-lived purchases, and room left over for the surprise.

Why plan a year, not a loan

Small business cash flow is thinner than most owners assume. The JPMorgan Chase Institute found the median small business held enough cash to cover 27 days of outflows, and a quarter held fewer than 13 days. In the Federal Reserve's 2024 Small Business Credit Survey, 51% of employer firms named uneven cash flows as a financial challenge.

With a buffer that thin, one late customer or one broken machine sends an owner to whatever lender can fund this week. A plan replaces those calls with applications made early, when you look strongest and have time to compare.

Step 1: Map the year month by month

Open last year's bank statements or your accounting software and build a simple table: cash in, cash out and the closing balance for each month. Then add what you already know about the coming year.

• Seasonal swings in sales
• Large annual bills: insurance, licences, property tax, bonuses
• Planned purchases: equipment, vehicles, a build-out
• Contracts starting or ending
• Existing loans maturing or ballooning
• Hiring ahead of busy season

Mark every month where the closing balance falls below your comfort floor. Those are your troughs.

Step 2: Sort each need into the right bucket

Every need on the calendar falls into one of four buckets, and each bucket has a natural product.

The key decision is lines versus term debt. A line suits needs that come and go, because you pay interest only on what you draw. OnDeck's line, for example, replenishes as you repay, up to a $200,000 limit. Term debt suits needs that stay, because a fixed schedule over the asset's life keeps the payment small. Funding a truck with a line ties up your flexibility for years. Funding payroll with a five year loan means paying interest long after the gap closed.

Step 3: Size the line from your deepest trough

Add up the shortfalls in your worst run of months. That figure, plus a margin, is the line you need. A landscaping company that runs $45,000 short across January to March, then recovers in April, should ask for about $60,000, not $45,000. The margin covers a slow spring.

Then check the line can be repaid in the good months. Lenders like to see lines paid down to zero, or close to it, at some point each year. If your plan shows the line never coming down, part of that balance is really term debt and should be refinanced as such.

Step 4: Time the applications

Lenders underwrite your most recent bank statements and financials. That makes timing a lever.

• Apply for the line after your strongest months. A retailer applying in January, with December deposits on the statements, looks far better than one applying in August.
• Apply for term debt once the purchase is real. Equipment lenders want a final quote. SBA lenders want projections tied to a real project.
• Count back from each need date. See when to start the financing process for lead times by product.
• Avoid applying for everything at once. Several hard credit pulls in a short window and several new payments landing together make each lender nervous.

Here is how a full year might look for a commercial cleaning company with $2.4 million in revenue.

Step 5: Leave room for the unexpected

A plan that uses every dollar of capacity is fragile. Build in slack on purpose.

• Keep part of the line undrawn. An unused line is the cheapest insurance you can buy. In the Federal Reserve's 2025 survey, 28% of firms that applied for financing did so to have credit available for future use.
• Keep a cash floor. Decide on a minimum balance, measured in weeks of expenses, and treat dipping below it as a trigger to draw, not a reason to panic.
• Keep debt service headroom. If new payments push your coverage near a lender's minimum, the next surprise has nowhere to go. How much your business should borrow shows the math.
• Know your fast option in advance. If a true emergency hits, know which product could fund in days and what it would cost. Deciding that in a crisis is how owners end up stacking advances.

Step 6: Share the plan with your broker

A broker who sees the year can sequence it. They may suggest an SBA 7(a) loan that covers the van purchase and working capital in one, since the SBA lists both as eligible uses. They may tell you a bank will give a larger line if you move your operating account. They may advise waiting a quarter so a strong season shows on the statements.

Send the one page calendar at the start of the year and ask for a 30 minute review. Then check in each quarter. Brokers give priority to owners who plan, because those files close cleanly. If you work with more than one specialist, read one broker or several before you split the plan.

Find a broker to build the year with

Lines of credit are the backbone of most annual plans. Search the register for line of credit brokers, or start with working capital brokers if your gaps are short and frequent. Every entry carries a register number and a last checked date, and verified entries show fees in writing.