When your company has spare cash, you face a genuine trade-off: use it to reduce or clear borrowing, or keep it available for the business. There is no single right answer, but a clear way of thinking about it makes the decision easier to defend.
Weigh the cost against the use
On one side is the cost of carrying the borrowing, as set out in your offer. On the other is what that cash could do if you held it, whether that is funding growth, covering a known upcoming cost, or simply keeping a comfortable buffer. The better choice is usually whichever produces more value for the company.
Questions to ask
- Do you have a near-term need that this cash is the natural home for?
- How comfortable is your cash buffer if you part with it?
- What does early repayment actually save, per your agreement?
Check the mechanics first
Before repaying early, confirm how it works for your product and what, if anything, it saves. Your offer is the governing document, and our early-repayment guidance explains the process. Flex and Slice can behave differently here.
Credicorp lends only to UK limited companies and LLPs for business purposes. As an exempt business lender, we are outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply.
See also: Should I borrow to take a supplier's early-payment discount?, What is an early repayment charge (ERC)? and Common mistakes to avoid with business borrowing.