Why is the peak funding need so much larger than my worst month?
Because deficits accumulate. On the worked plan February is 504,042 negative, but it lands on a business that already spent 381,129 in January, and March takes 403,608 more before receipts arrive. The trough is 993,779 below zero, so the need is 1,143,779 rather than 504,042. The difference, 639,737, is the accumulation.
How many years of bank history do I actually need?
Two completed years produce an index. Three let you measure dispersion properly and run the backtest, which is what makes the cushion arguable. Partial years are excluded entirely: a year with eleven months has an inflated share in every month it does have, and averaging it in contaminates the whole index.
Is a three-year index enough to trust?
For the stable months, yes. On the worked history August through February all sit under 0.15 percentage points of spread. March, April and May carry 10.5 of the 13.6 points of total spread, and the pack marks them volatile rather than pretending the average is the truth. That is exactly what the cushion exists for.
Why compute the cushion from dispersion instead of adding a percentage?
Because a round percentage cannot be defended and the dispersion can. Re-running the pre-trough months on the worst shape the history produced gives 1,387,935 against a central 1,143,779, so the cushion is 21.3 percent for a stated reason. It is not a worst case, and nothing prevents a future year being worse.
Does the pack tell me which facility to get or what rate to expect?
No. It sizes a need, a cushion and a schedule, and the 9.25 percent used to compute interest is an illustrative sizing input rather than a quote. Which instrument fits, how it should be priced and whether to borrow at all are decisions for you and your advisers. The pack produces the analysis they work from.
What if my business changed since the history was written?
That goes in the Seasonality Notes as a named, dated override applied to the plan, with its own row, never by editing the index. A new location, a terms change or a lost anchor account invalidates the shape while leaving the arithmetic intact, and the index stays as the clean record.
What does a lender want to see, and when should I bring it?
Before the season, which is the whole point. Two things get assessed: whether the need is genuinely seasonal, and whether the line self-liquidates. Federal Reserve Regulation A frames seasonal credit around expected patterns of movement in funding needs, and the SBA CAPLines rule covers cyclical, recurring short-term operating capital needs. Both are pattern tests.
Seasonal Pattern