Most financing conversations start at the end. An owner has decided the business needs capital, has picked a number, and wants to know who will provide it. The number is usually a symptom of something upstream.
Capital solves a timing problem. It does not solve a margin problem, a pricing problem, or a collections problem. Borrowing against a structural issue buys time and adds a fixed obligation to a business that was already under pressure.
Separate the timing problem from the structural problem
A distributor that is growing 40% and converting cash in 75 days has a timing problem. Financing receivables or inventory is a rational response, because the underlying economics work and the gap is mechanical.
A contractor whose gross margin has compressed four points over two years does not have a timing problem. Additional capital extends the runway on an unprofitable structure. The lever is pricing or job selection, not a line of credit.
The cost of the wrong structure
The wrong structure is rarely obvious on day one. Short-term capital used to fund a long-lived asset looks affordable in month one and punishing in month nine, when amortization consumes the cash the asset was supposed to generate.
The right capital can create optionality. The wrong structure removes it — often at the exact moment the business needs room to move.
A better sequence
Define the objective. Identify the constraint. Determine the highest-leverage move available. Then decide whether capital is part of that move and, if so, what form it should take.
Sometimes the answer is a facility. Sometimes it is a change in terms with three customers. The work is deciding which.