Stuart Urqhart

When is a short-term loan right for your client?



674_2021-10-11-04-51-54pm.gif
As a broker, you understand your clients' business needs, but perhaps you haven't considered how a short-term loan could be the perfect solution for them.

Many established businesses find themselves in need of a quick infusion of capital at one point or another. This is especially true for those companies that work on a contractual basis or are experiencing a growth period. Here, I’ll share the most common uses for short-term loans that I have recently come across.

Managing cash flow/bridging receivables

Profitable companies often seek short-term loans to manage cash flow. A broker partner recently contacted us on behalf of a manufacturing client, which had been trading for over 10 years and needed to bridge a late payment in order to cover day-to-day expenses. Accounts payable, salaries and office costs were subsequently all covered.

Using a £75,000 short-term loan in this instance ensured a consistently positive bank balance and peace of mind for all involved. Once the business received the outstanding payment, the loan was repaid quickly—and without incurring early repayment fees.

Purchasing equipment/stock

Many brokers I work with recommend a short-term loan to their clients to buy inventory or new equipment. One such case involved a retailer – which had been operating for six years – with plans to purchase discounted stock. The business owner didn’t have the funds available to seize the opportunity and therefore looked for a £150,000 short-term loan. Securing a loan within one working day meant the client could act quickly and purchase the additional stock that ensured strong sales followed.  

Renovation/refurbishment

I often hear from brokers about clients who have outgrown their current set-up. We were recently able to offer a loan of £250,000 to a recruitment agency in the South West that had employed a large number of staff and needed additional funds to expand its offices at short notice. Being a profitable business and operating for over 12 years meant we were able to approve the credit line and help the business renovate its premises.

Business owners from a broad range of industries find themselves facing a surprisingly common set of challenges that stand in the way of reaching their potential. By sourcing financing that fits, meaningful steps can be made towards business growth.

And remember: some opportunities don't knock twice. If you are unable to source a suitable loan for your clients, they might work with a different broker next time around. This, ultimately, makes you lose out on new business.

Leave a comment