Forest already have four loanees within their ranks, and only five can be used on any given matchday.
Davies is not a fan of short-term deals, as they do not allow for future planning, and has no intention of recruiting fresh faces for the sake of it.
He has been assured that he will be backed by the board if he does suddenly feel the desire to strengthen, but the Scot is hoping those already at his disposal can fire Forest back into promotion contention.
On his discussions with owner Fawaz Al Hasawi, Davies told the Nottingham Evening Post: "He's made it clear that, if we need loan signings, they are there for us, they are available. But I've made it clear I want to assess the team first.
"Let me see if we can win football matches without taking for taking's sake. The money is there, the option is there, but it is not about that. It is about needs must.
"Why did I recommend a player in the January when I was last here? I recommended because quite simply I felt that's what it would take to get us over the line.
"It is the same again here. I will tell him what I think, I will make suggestions. We will sit down and put together a package for a player and, if the selling club is willing to do business, we will."