3 Things That Make a Business Loan Really ‘Flexible’.
Business loans are often marketed as ‘flexible’ but what really makes a business loan ‘flexible’?
I think there are 3 key factors that make some business loans genuinely flexible:
Repayment structure.
Some business loans offer daily, weekly, fortnightly or monthly repayment structures.
Cashflow for many businesses can be lumpy and unpredictable, so the flexibility of smaller daily, or weekly, repayments can really help with budgeting and make a business loan far more useful to them.
Early Settlement.
Some business loans do not offer attractive early settlement terms, however, the business loan that does offer attractive early settlement terms is the one that can be rightly regarded as flexible.
Imagine your business has a requirement for loan funding right now, perhaps to purchase stock, or pay for new hires, or cover a spike in cashflow - however, you know within a year or two, whatever the driving purpose was for drawing down the loan, it has now passed, and the business doesn’t want to be paying this facility back for any more years to come. This is why an early settlement that allows you to pay just the capital back, not the remaining interest, is a brilliantly flexible advantage over the standard loan.
You may ask ‘why not just draw down a shorter-term loan'…well, let’s say the business needed to borrow £50,000. Repaying this over a 72-month period makes the capital repayment significantly lower than repaying over a 12-month period. This means less pressure on cashflow. And knowing you can settle a third, or halfway, through the term and save on the remaining interest offers the business the flexibility of avoiding naturally higher repayments.
Uplifts/Renewals.
This fact is likely unknown to most businesses, but more and more of the modern business loan providers now build in uplifts or renewals to their products.
How does this work? The business has a requirement for £30,000 to cover marketing costs. They draw this down over 12-months, perhaps on a daily or weekly repayment profile, and once 40% of the initial £30,000 is paid off, they can request a further advance.