The Benefits of Seasonal Business Loans
Managing cash flow is integral to all businesses; however, for seasonal businesses (or any kind of company that experiences fluctuating income), it presents a unique challenge. Revenue might vary, but expenses – normally – do not. So how do company leaders bridge the gap? Enter: the seasonal business loan.
A great benefit of Seasonal Business Loans is the flexible seasonal repayments. We can reduce repayment costs during the quieter months of business when revenue reduces and then in busier months, you can pay more to clear the loan. Seasonal Business Loans provide not only a helpful safety net, but also a potential catalyst for growth. Indeed, with a bit of foresight and planning, the support of a seasonal financing method can help business owners maintain their operation, invest in vital equipment, tech or marketing for the future, and maximise their profits.
In this blog, we’ll discuss the mechanism of the short-term (or seasonal) Loan, and the ways in which it can prime your seasonal business for success.
What is a Seasonal Business Loan?
Sometimes housed under the collective term ‘short-term loan’, a Seasonal Business Loan helps a seasonal business achieve its goals in the short term. Such a loan can help companies manage – and project – cash flow during ebbs and flows; in addition, a short-term loan can be used for growth or to cover unexpected costs. A Seasonal Business Loan enables you to pay back your loan in a flexible way that suits your business, we tailor your repayments on seasonal reliant factors and how much you can afford.
One of the best things about taking out a seasonal Loan is the freedom and flexibility it affords within a more unpredictable (or predictably fluctuating) business model. For instance, the support of short-term finance will ensure you don’t have to cut costs during quieter months; after all, there are some expenses that are vital to the long-term viability of a business, whatever the time of year. From covering payroll to purchasing stock, a Seasonal Business Loan can bridge any gaps during ‘off-season’ and ensure the company is adequately equipped for the intense demands of high season.
What can I use a Seasonal Loan For?
A Seasonal Business Loan can be used to cover almost anything – another great benefit!
As an example, you can use a seasonal business loan to…
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Aid cash flow. As mentioned above, whatever kind of seasonal business you run (perhaps your business is open all year round but experiences ‘high’ and ‘low’ demand periods; or perhaps you only open during ‘peak’ months), there are peaks and troughs in terms of revenue. If required, a seasonal loan allows you to maintain a steady cash flow throughout the year, regardless of your income.
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Maintain stock. Whilst seasonal businesses require most of their stock during the most frenetic periods, it’s smart to keep this ‘topped up’. A loan provides the extra cash needed to maintain a good level of inventory (and to purchase additional stock in preparation for an upcoming busy season, if needed).
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Pay your staff. Depending on your business model, you may require staff throughout the year: a marketing executive, a customer services department, or an office manager, for example. A Business Loan would allow you to cover payroll during quieter periods. Alternatively, you may need extra funds to bring in seasonal employees – extra staff to deal with increased demand – and a seasonal loan can support this additional cost.
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Upgrade and invest. The ideal time to update your tech, invest in a new marketing campaign, or upgrade equipment is not when the business is busiest: this is the time during which everything needs to be working at full steam. It’s important to attract clients before your business’s high season arrives – to both maximise sales during peak periods, and prevent sales from dropping too low during quieter months. Similarly, it’s vital to keep on top of technology and equipment needs – and because there might be times when your business is required to deal with a sudden influx of customers, your systems need to be robust enough to support this. However, for many company owners, the funds are simply not available during quieter times when revenue is low. A seasonal loan provides extra funds to support this essential activity.
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Cover overheads or unexpected expenses. With most businesses, regardless of their level of activity, there are ongoing expenses: utilities, insurance, rent, etc. In addition, there may be unexpected costs – a bad weather situation that damages equipment or premises, for example – which need to be settled. A seasonal loan can help you stay on track and ensure that everything is paid on time, regardless of the time of year.
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If you’re looking for financial support that is specifically tailored to your unique business model, please contact Cherry Godfrey today. Long-term relationships are key to our ethos – so we’ll be sure to take the time to get to know you, your business, and your aims, to ensure that we put together the very best deal. We look forward to helping you!
