One of the most useful habits in managing business borrowing well is matching the facility to the thing it funds. Borrowing that outlives the value it created tends to feel like a drag; borrowing that is too short for the need it serves creates avoidable pressure on cash flow.
The principle
Short-lived needs, such as covering a seasonal stock build or bridging a known receivable, usually sit best against shorter, self-clearing borrowing. Longer-lived investments that generate value over an extended period can reasonably be supported over a longer term. The aim is for the repayments to be serviced by the cash the spending helps produce.
Putting it into practice
- Ask what the money buys, and roughly how long that benefit lasts.
- Ask when the cash to repay it will actually arrive.
- Choose the term in your offer with both answers in mind.
How our products fit
Credicorp Flex tends to suit recurring, shorter-cycle working-capital needs, while Credicorp Slice suits a defined purpose. The rate and term you receive are set out in your own offer.
Credicorp lends only to UK limited companies and LLPs for business purposes. Because we are an exempt business lender, the Financial Ombudsman Service and FSCS do not apply, so reading your agreement carefully matters all the more.
See also: Working capital vs growth finance: matching finance to purpose, Common mistakes to avoid with business borrowing and Keeping your company details current with us during the term.