Managing business loan repayments: A guide to financial health

Unpaid loans can represent a source of anxiety for many Brits. Of 1,700 people surveyed by the Citizens Advice Bureau, half said their debts were having a direct impact on their physical health and of that half, 51% said they’d had panic attacks, while 79% agreed that they were experiencing sleepless nights.

That’s why we always recommend entering into any financial agreement equipped with as much information as you can find.

But with so many different business loan types available, even armed with all the information, it can still be easy to lose track of repayments.

Here are our top tips for ensuring you consistently repay your business loans. 

Four tips for managing business loan repayments

Managing business loan repayments requires a proactive approach, careful planning, and consistent efforts.

Gather all the information you need upfront

Don’t wait to get that payment notice. Find out everything you need to know before you sign on the dotted line, including:

• What day of the month the lender will collect the payment

• How much interest you’re paying

• If there will be a balloon payment at the end of the loan term

• The exact length of the loan term

• Any applicable fees or penalties for late or missed payments

Create a monthly budget

There’s a reason many financial advisors recommend creating a monthly budget. While as a business your income can be a little unpredictable, most businesses tend to see patterns that can be used to predict future income, for example, seasonal increases in sales. 

Making a budget in advance lets you see exactly how much you’re going to be spending each month so you know what you can afford to repay. If you know in advance that your income may not meet your liabilities for a particular month, you can then decide where reductions can be made or search for ways to increase income for that specific period.  

A budget can help you prioritise loan repayments by ensuring you allocate sufficient funds in advance. This prevents you from accidentally overspending on less essential items during the month, guaranteeing you have the necessary funds to meet your repayment obligations.

Set up a direct debit

The easiest way to keep up with regular repayments is to set up a direct debit or standing order. While the amount you need to repay may vary depending on the loan type (asset finance is likely to be more predictable month by month than a business credit card), a direct debit or standing order can ensure you’re at least meeting your minimum obligations on time.

Build an emergency fund

Establish a separate savings account for unexpected expenses or downturns. Having a financial cushion can prevent you from missing loan payments during challenging times, not to mention, provide peace of mind and reduce financial stress.

Apply for a business loan with Funding Options by Tide

We help match business owners with our network of over 120 lenders. It’s easy to find out if you’re eligible, just click the link below and fill in your information to find out how much you can borrow.

Click here to find a suitable business loan.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.