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Most repayment problems start before a penny is borrowed. A business owner takes out a loan based on what they think they need, then discovers the repayment schedule does not match how money actually moves through the business. The solution is straightforward: plan the repayment in detail before you sign anything. Here is how to do it.
1. Work out the minimum you actually need
Borrowing more than you need feels like flexibility. In practice it means higher daily repayments, more total interest, and a longer period of financial obligation for no extra benefit. Before you apply, write down the specific gap you are trying to close — a piece of equipment, a stock order, a bridging shortfall — and put a precise figure on it. If the number you land on is £18,000, do not borrow £25,000 because "it might come in handy." Borrow what solves the problem. You can always return to us if another need arises.
Use our repayment calculator to see how the loan size directly affects your daily or weekly outgoing before you commit to an amount.
2. Map the repayment against your expected income
A loan repayment is not paid from a bank balance — it is paid from revenue. Before borrowing, pull up your last three months of bank statements and identify when money reliably comes in. If your customers pay on 30-day terms, your cash position on the 15th of any month is very different from your position on the 1st. Match the repayment schedule to the periods when your account is genuinely in surplus, not when you expect it to be.
If your income is seasonal, be especially careful. A repayment that looks comfortable during peak months may become a strain in a quiet period. Model the quiet months, not the busy ones.
3. Check the total cost, not just the daily rate
Short-term business loans are often quoted as a daily rate, which can make the cost look small. What matters is the total repayment over the full term. The calculation is simple: multiply the daily rate by the number of days in the term, apply it to the amount borrowed, then add any arrangement fee. That figure — not the daily rate — is what leaves your business.
For example, a £10,000 loan at 0.8% per day over 90 days, with a £250 fee, produces a total repayment of £17,450. Whether that is good value depends entirely on what the loan generates for the business. If it funds a contract worth £40,000, the cost is straightforward to justify. If it covers a gap with no return attached, think carefully.
4. Leave a buffer
Do not plan a repayment schedule that relies on every pound of expected income arriving on time. Invoices get delayed. Customers query amounts. A supplier payment clears a day late. Any of these can tip a tight schedule into a missed repayment. A reasonable rule of thumb: your projected monthly income during the repayment period should be at least 20% more than the monthly repayment obligation. That margin absorbs the ordinary friction of running a business.
5. When to stretch the term versus shorten it
A longer term reduces the daily or weekly repayment amount, which eases immediate cash pressure. The trade-off is more total interest paid. A shorter term costs less overall but demands more from the business in the near term. Neither is automatically better — it depends on your cash flow. If the business generates consistent surplus income, a shorter term saves money. If cash flow is tighter or lumpy, a longer term with a lower repayment may be the safer choice even if it costs more in interest. The goal is a repayment you can meet comfortably, not the lowest total cost on paper.
6. What happens if you cannot repay on time
If circumstances change and you anticipate difficulty meeting a repayment, the most important thing is to contact us before the payment is missed — not after. Early contact gives us the opportunity to discuss your options. We take a practical approach to payment support: we would rather work with you through a difficult period than compound a short-term problem into a longer-term one.
Waiting to see if the situation resolves itself, or hoping a late payment goes unnoticed, makes things harder. Our approach to missed payments is set out in full at 'What happens if you miss a payment' — it is worth reading before you borrow, not when something goes wrong.
Frequently asked questions
- How much should I borrow if I am unsure of the exact amount I need?
- Start from the specific cost you are trying to cover and borrow to that figure. If there is genuine uncertainty — for example, a project where final costs are not confirmed — consider a slightly lower amount for the certain element and return for a further facility if needed. Overborrowing to cover uncertainty is rarely the right answer: you pay interest on money you may not use.
- Can I repay early and reduce the total interest I pay?
- Yes. Early repayment is available on our facilities and reduces the total interest charged, since interest accrues daily. If your business generates an unexpected cash surplus during the loan period, making an early full or partial repayment is usually worth considering. Contact us to confirm the current settlement figure.
- What if my income is unpredictable month to month?
- Variable income requires a more conservative approach. Base your repayment planning on your lowest realistic monthly income over the last year, not your average or best months. If the repayment is only affordable in a good month, the facility is too large or the term is too short for your business at this time.