The Financing Question Is a Profit Question
Before you reach for a card, a loan or an investor, run four checks on your business. The cash you want to borrow is usually already inside it.
By James Schramko · Updated October 2026
When cash gets tight, the question arrives in a familiar form. Which card has room? Will the bank extend the facility? Would a friend of a friend put in two hundred thousand for ten percent? Every version is about money coming in from outside.
Answer a different question first. Where did the profit go? In almost every business I've looked at under cash pressure, the money was already there. It sat in unpaid invoices and in terms that let clients pay late. It sat in a product that lost money on every sale, or in a payroll the business grew into without noticing. Borrowing covers the symptom for a quarter. The four checks below find the cause, and most founders can run them in an afternoon.
Check One: What You Are Owed
Before you borrow a dollar, print what you are owed, oldest first, and add it up. Is that total bigger than the gap you want to finance? Then what you have is a collections job, and the money is already yours. The Money You Already Made shows how to ask for it.
Check Two: Your Terms
Cash pressure teaches founders to negotiate against themselves. A client owes you a few thousand dollars and floats a much bigger idea for next year. Quietly, the invoice becomes part of the bigger conversation.
Never fold an unpaid invoice into a bigger idea. It teaches the client that invoices bend when your cash is tight, and clients learn that fast. The work was done as agreed, so the invoice stands. The only open question is when it gets paid. The future deal is a separate talk that starts after the account is clear.
Then look at your terms for new work. Do new clients start before any money lands? Are retainers invoiced after the month instead of before it? Then your business is lending to every customer it has. That is the loan you were looking for. Call it in by changing the terms for every new client from today. Take a deposit before a start date, and bill anything recurring in advance.
Check Three: Profit by Line
Revenue hides the line that loses money. In my own SEO business, a cheap starter package sold well. When I pulled the profit on it, it made about seven dollars a month per client. It also pulled attention from the top tier that paid for everything. I killed it, and profit on the top tier went up, because the attention came back to the product that earned it.
Put the profit next to every product and client, and read down the column. Ignore the revenue for now. Anything near zero is a candidate to cut. Cutting it frees cash twice. The delivery cost leaves with it, and your attention returns to what pays.
Price belongs in this check too. Founders under cash pressure assume a price rise will cost them customers. I've seen owners raise prices and watch fewer people leave than before. They kept the customers and earned more on every one.
Check Four: The Size You Grew Into
Payroll grows one sensible hire at a time. Nobody marks the day the costs passed what the margin could carry. I've watched owners shrink a team that had grown bigger than they needed. The size had never made them healthier or more profitable. Within a couple of months, the business was back in profit.
Pull your monthly fixed costs. Ask of each line what would break tomorrow if it stopped. The lines with no good answer are a loan you have been paying for in lost profit.
When Money In Is the Right Answer
Outside money has its place, and the place is strength. I've seen founders with a healthy profit every month turn investors away below their own terms. They could do that because the business didn't need the money. So they set the terms.
That is the test. Say the four checks come back clean. What you are owed is collected, the terms are tight, every line makes money and the costs fit. If you still want capital to move faster, you are raising from strength and can pick your terms. If any check fails, the capital will fund the failure for a few more months, at a cost. Then the question comes back.
Self-Diagnostic
What is the total owed to you right now? How does it compare to the amount you were about to borrow?
Which of your clients pays after the work instead of before it? Each one is a line of credit you gave away for free.
Which product or client shows a profit near zero once you put the real delivery cost beside it?
What would stop tomorrow if your largest fixed cost disappeared? If the answer is nothing you would miss, the money is there.
What To Do This Week
Print what you are owed, oldest first, and send a direct ask on the top three. Rewrite the terms for your next new client so a deposit lands before a start date. Pull profit by product onto one page. Then open the loan application again and see whether you still need it.
Quick Reference
- The question arrives as money in. Answer it as profit first.
- Check one: what you are owed. If it is more than the gap, you have a collections job.
- Check two: terms. Never fold an invoice into a future deal. Deposits before start, retainers in advance.
- Check three: profit by line. Cut the passengers, and test the price before you assume a rise costs customers.
- Check four: costs. Ask of every fixed line what would break if it stopped.
- Raise from strength or not at all. Capital will fund a cause as readily as a cure.
Running these four checks on your real numbers, before the loan application goes in, is a talk I have often inside Mentor.