Business loans and SME financing

Why small businesses need outside financing (and when they don't)

A business often needs cash before it earns cash. A sari-sari store owner has to buy stock before selling it, a food cart needs a cart and initial ingredients before the first customer pays, and a growing shop may need to rent a bigger space months before the extra sales show up. That gap between spending and earning has a name, the cash conversion cycle, the time between paying for inventory or supplies and actually collecting cash from a sale, and outside financing exists mainly to bridge exactly that gap.