Commercial Loan Options for Seasonal Businesses in the UK

Running a seasonal business in itself is quite challenging but also interesting. You know how things happen if you are also a seasonal business owner. Seasonal businesses have volatile sales at different times of the year. They also depend thoroughly on weather conditions. 

Such businesses generate a lot of profit during a specific time. However, fluctuations occur. The business profit ratio goes down as soon as the season is over. It would not be an exaggeration to say that seasonal business is a profitable affair in itself, but with difficulties.

Despite the challenges, you can try running a seasonal business. But you may need financial support in a recurring manner. The commercial loan options can provide answers to all your worries. 

Are you looking for some kind of financial support for your business?

Several loan solutions are available in the market. By using them, you can grow your business perfectly when the season comes. 

Benefits and challenges for seasonal business in the UK

Every coin has two sides. Similarly, the seasonal business has some benefits and some challenges, too. From the table below, you will learn that doing seasonal business is easy and difficult.

Benefits	Challenges
Flexibility to work stress-free	Tricky cash flow management
Concentrated revenue opportunities	Staffing challenges
Lower year-round expenses	Fluctuations in revenue
Change to take over niche market	Affected by external factors

Commercial business loan options in the UK

The UK is a financially equipped country with many options for doing business. This is why there is no doubt about the profitability of seasonal businesses. However, business owners need money from time to time. 

Do you also feel the need? Well, several loan options are available. The UK loan market is quite versatile. You can avail of affordable loan deals by hiring a business finance broker. There are some seasonal business loan options which will increase your business manifold. 

Working capital loans for seasonal business

As you can read above, cash flow management is a big challenge in seasonal businesses. It happens mostly through working capital insufficiency. In such a situation, taking a working capital loan can be a good option. Specifically, this type of loan is suggested to seasonal business owners.

However, it is essential that before taking the loan, you check multiple loan companies instead of just one lender. It is wise to make a decision only after comparing the interest rates and repayment plans of each lender, 

Working Capital Loan has many benefits, which is why seasonal business owners in the UK always prefer it. It is a great option if you are planning something new for your business in the coming time. Use it and get help to bridge the financial gap. 

Benefits of working capital loans – 

• Available on instant approval decisions for last-minute requirements. 
• Short-term loan choice that you can get rid of faster once the need is over.
• No guarantor, no collateral required to borrow money. 
• Customized interest rates and repayments make a loan deal affordable. 
• Multiple working capital loan options give you options to choose from.

Inventory finance for seasonal business

As you might be able to understand from the name, Inventory Finance lets you purchase inventory or stock for your business. It is also called warehouse finance.

You need to purchase different types of inventory for your seasonal business, such as raw materials, finished goods, components, etc., which are finally stored in the warehouse. This is vital for safekeeping before selling to the final customer. 

The inventory you buy acts as a security for finance. Through the inventory finance option, you can increase your cash flow. Easily maintain it by removing the imbalance of income and expenditure. This commercial loan option lets you buy goods and materials for your business on time. 

After the business season starts, the price of everything rises. In such a situation, you can buy stock only through inventory financing in the off-season. You can prepare for your seasonal commercial activities at very low prices. This, in turn, prepares your business in advance for creating good sales. This ultimately helps you in bringing more profits.

Benefits of inventory finance – 

Inventory financing has many benefits for seasonal businesses. Read them below to understand that you have chosen the right option. 

• Cover short-term expenses 
• Expand your business product line 
• Buy in bulk to get higher discount deals
• Free the capital tied up in inventory 
• Prepare the stock for the busy season

Invoice finance for seasonal business

In invoice financing, you can borrow money using your unpaid invoices. Present your unpaid invoices to the lender, and in return, you will receive a particular percentage of the pending invoice amount as a loan. 

Sometimes, in emergency situations, it is not possible to arrange funds instantly. As a solution, seasonal business owners hand over their invoices to lenders to access fast cash. This is justified as it is not always possible to wait for the customer’s payment. 

The loan company approves funds up to 70% to 90% of the value of an invoice. This allows you to meet your needs by borrowing money immediately and does not require external help. 

There are two types of invoice financing; one is invoice factoring, and the other is invoice discounting. 

Invoice factoring – Invoice factoring occurs when the customer pays the bill to the lender. The lender is responsible for taking back the payment by chasing the customer on the due date. 

Invoice discounting – On the other hand, in invoice discounting, you pay your invoice yourself. When you get the money, you pay it back to the fund provider.

Benefits of invoice financing – 

Of course, invoice financing has some benefits like other types of finance options. Let’s see how the two types of factoring and discounting help your business. 

• Flexibility to borrow funds using your invoices anytime. 
• Transparency in case of invoice factoring as the customers know they are paying to the lender. 
• Confidentiality is an option in case of invoice discounting. Borrowers do not get to know that their bills have been pledged. They are not responsible either for any payment other than their bill. 
• Speedy and easy funds are available. You can borrow funds at the last minute without any delay. Use the funds for any reason. 

Asset financing 

Asset financing is a type of secured borrowing. It allows you to take a loan against any asset. For example, you can borrow money against your machine, vehicle, or tool in case of an urgent need for your seasonal business. 

If you need cash but do not have a sufficient amount, consider asset financing. It also works in different ways, such as a lease agreement. You buy equipment, and you pay rent for it every month. 

As soon as the use of the machine is over, you will return the machine along with the complete payment. Another way is that you will pay the price of any equipment entirely within a fixed duration. After that, the machine or tool becomes your property. You will become its owner. 

Asset refinancing is also an option that works a little differently. Do you already have a high-value asset? If yes, the asset finance provider can give you a loan for a certain percentage of the asset’s value. The loan can be paid back in instalments.

Benefits of asset financing –

• As you pledge an asset, you can borrow funds at quite a low rate.
• Secured form of financing facilitates easy approval even if you have a poor credit rating. 
• Improve cash flow as you can borrow a large amount using your assets. The money can be used for many purposes. 
• You can save your working capital by using the asset to borrow an additional amount of money. 
• Spread the cost of equipment or machines in varied, easy instalments. This, in fact, helps improve your credit rating if you make timely payments.

Conclusion 

As you can see, all the commercial loan options given above can be very useful for your seasonal business. Each loan option has its own speciality and can easily fulfil short-term to long-term financial requirements. Just keep this in mind: Before choosing any loan deal, properly compare the available loan deals in the market. 

Hire business loan brokers like Thebusinessfunds. Our professional team will help you with everything from finding the loan deal to the loan process. If the season of your business is about to come, then best of luck first of all. Here is an important suggestion. Whether the loan is short or long-term, always borrow the money according to the limits of your budget. If you take it, you have to return it too.