What is a Repayment Holiday and how Does it Assist Businesses?

Saroj Shah
November 12, 2022

The holiday season is a boon to business owners who can optimise their cash flow and cater to the demand! Businesses need adequate cash to keep pace with this demand by stocking up on inventory and hiring more staff. During the holiday season, a loan instalment can be an added burden on business owners. It can reduce the cash flow buffer and stretch their resources at a critical time. In such a scenario, a repayment holiday on their business loans can help them defer the instalments. Did you know that there is a special offer for businesses to get an 8-week repayment holiday during the end-of-year festive season? Let’s break down what a repayment holiday means and how it helps businesses.

 

Repayment Holiday for Business Loans: What Does it Mean?

A repayment holiday is a short-term break when you do not have to pay the instalments for your loan. Borrowers have to pay contractually stipulated instalments regularly to repay their loans. They usually have to make these repayments on a weekly, fortnightly, or monthly basis. A repayment holiday provides a temporary break from this contractual requirement to pay. The interest accrued during the repayment holiday is capitalised to the principal amount.

 

Getting a Repayment Holiday to Manage the Festive Rush

If you want to get a repayment holiday during the Christmas season, you can avail of a special offer from our lending partners. The 8-week repayment holiday offer runs throughout November and December. This offer allows eligible businesses to get a repayment holiday during the festive rush. As a result, they do not have to make any repayment for up to 8 weeks from the starting date of their business loan. The lender adds this period’s interest to the principal amount so that the borrower can pay for it later.

 

Advantages of Taking a Repayment Holiday

Borrowers can avail of this offer as it delivers the following advantages:

  • Cash Flow Buffer: The deferral of instalments can help you manage your cash flow during the holiday period. A repayment holiday can help a business owner optimise the availability of liquid capital. Loan instalments can take away from the day-to-day working capital of the business, affecting the cash flow situation. For example, during pre-Christmas sales, you may need more cash than usual to stock up on additional inventory. Postponing instalment payments during this period can make these decisions easier to execute.
  • No Obligation to Pay for the Approved Period: When the lender approves your repayment holiday for a stipulated period of up to 8 weeks, you do not have to pay any amount to the lender. You are legally freed from the obligation of paying your instalments at this time.

Many business owners get worried that the repayment holiday will lead to higher interest payments due to recapitalisation. However, this temporary break is an excellent way to give your business a breather and generate opportunities to create more profits. For example, if you invest cash to buy inventory during the holiday season and make more sales, the additional revenues will offset your higher interest charges.

 

Availing of Your Repayment Holiday

You can get attractive repayment holiday terms on your business loans with the help of Broc Finance. This organisation has a stellar team of finance brokers who can connect you to lenders who are running this offer!

Saroj Shah

Saroj is the Head of Lending at Broc Finance. He comes with 13+ years of experience in small business lending and has a knack of structuring complex deals and get the best outcome for his customers.