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When do I have to pay back a small business loan?

  • Blog
  • 10 February 2017

Taking out a small business loan is a great way to provide yourself with a cash injection that can cover a variety of costs and benefit your business in different ways.

However, it’s important to make sure you pay back the loan and on time. We explain when you have to pay back a business loan and the benefits of paying it back promptly.

When do I have to pay back a small business loan?


Sticking to agreed terms

Business loans and other financial agreements are subject to a range of checks. This can include a credit check to ensure a borrower’s suitability for a loan.

A credit check is used to help calculate risk to a lender. With many loans this also helps to dictate a number of terms, such as the amount you can borrow and the rate of interest. It can even influence the length of time you have to repay the loan.

The check also helps to dictate the repayment dates of a loan. This can include the date the whole loan will be repaid by and the specific date the loan provider expects a repayment to be made each month.

These terms are agreed upon in the process of finalising a loan. From there, it’s your responsibility, as the borrower, to ensure you meet your side of the agreement and make repayments at the specified times. Repayments can be set up as a direct debit from your bank account. You just need to ensure there will be enough money in the account to cover the agreed fees.

The benefits of repaying a loan

Repaying a loan is important. Failing to do so can have serious consequences, as we have outlined in our blog post, What happens if I can’t repay a business loan?

By repaying a loan on time, you avoid any penalty fees and can retain the credit rating of your business. Failure to meet any repayments can violate your loan agreement, resulting in you having to make additional fees, or, worse, causing your business to default on the loan.

This can seriously hamper the credit rating of your business, making it difficult for you to get access to other financial services in the future. As a result, this can disrupt your company’s growth, especially if you need loans and funding for equipment or facilities, for example.

If your loan is secured against collateral, such as equipment, vehicles, or property, failure to pay can put aspects of your business at risk. This is because loan providers can seek to claim collateral in the event that you can’t repay the loan.

FSB Business Loans

To help our members when repaying a loan, FSB gives access to an unsecured business loan where repayments are linked to their company’s cash flow.

This reduces the impact on your bottom line, as repayments can be carried out as a set percentage of future credit and debit card transactions. They can also be repaid using a fixed direct debit.

Our loans are also unsecured, meaning they’re not tied to any assets, which protects your stock or equipment from repossession if you fail to pay.

To find out more about how our cash advance can help your business, get in touch with a member of our team or visit the FSB Cash Advance page.