Many businesses borrow in the run up to Christmas but repayments can hurt… here’s the solution
The fact is, Christmas is the biggest event in the year for many businesses, and requires some investment to gain the maximum return. For businesses that are new, or averse to borrowing this could mean digging into their own pocket to stock the shelves, hire new staff or beef up the marketing. The answer is to find alternatives to the standard “borrow now, pay back monthly” loans that are the first resort for many business owners.
Swoop, who powers our Chamber Finance Finder, recommend:
“There is more to getting a good deal than simply adding up how much it costs to borrow a set amount. Things that can make the deal sweeter may include interest-only periods, payment holidays, or other finance products that particularly suit your clients’ needs.”
Swoop says that asset finance is one of the most popular options for businesses looking to refit their premises or acquire expensive new equipment:
“Asset finance gives your client more bang for their buck. They will likely find that the right deal will come with perks such as maintenance or even training for machinery. Having the right tools for the job definitely boosts morale of the staff, and in the middle of a talent shortage, this may be more valuable to employers than a percentage point here or there on the loan cost.”
It is all well and good to repay a loan while the customers are queuing at the cash register, but what happens when income tails off and the new year slump sets in? Swoop says that the market has a solution to this problem:
“The Merchant Cash Advance (MCA) is one of the most flexible forms of funding and it’s great for businesses that have seasonal variation. You borrow at a fixed cost and repayments are made as a percentage of sales through your card terminal. MCAs have become increasingly popular as they adapt to the growth and operating pattern of your business.”
They are also one of the fastest ways for a business to access finance as in some cases an offer can be made within 24 hours of application.
The downside to an MCA is that the flexibility comes at a cost: the business may have to pay more for an MCA than a standard business loan. And if they don’t have a card terminal, they cannot use this product.
With many retailers trying to balance a lean online business with a great in-store experience, it makes sense to understand exactly what your options are and how you can borrow smarter.
If Christmas is too important a date in your calendar for you not to invest in, you need to know where you will find the funds required to make the most of the season. Check your options on your Chamber Finance Finder now to ensure you don’t miss out.
© Cumbria Chamber of Commerce