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Loan options for seasonal businesses


There are many types of business that could be described as seasonal, relying on specific times of the year to generate the bulk of their income.

While the likes of ice cream parlours, Christmas decorations retailers and wedding planners may see demand rise and fall throughout the year, one thing will remain constant – the need to meet the ongoing costs that come with running a business. 

If you own a seasonal business, a loan could be a valuable tool to help you manage your cashflow during the slower seasons and be prepared for growth when demand increases again. You could use the loan funds for a variety of purposes, including:

  • Covering operating expenses, such as rent, utilities, wages and marketing costs
  • Purchasing stock in readiness for your peak trading season
  • Investing in your business, for example buying new equipment or training staff

A business loan may be a good option if your business experiences seasonal fluctuations in income, but it’s important to make sure you can afford the monthly repayments and that you understand the terms of the loan before you sign a contract.

Making your monthly repayments on time can improve your credit score, which may increase your likelihood of being accepted when making loan applications in the future.

Before taking out a business loan, always consider the following points:

  • Repayment terms: The length of time you will have to repay a business loan can range from a few months to several years, so you’ll need to be mindful of the need to make ongoing monthly repayments during the term of the loan.
  • Personal guarantees: If you provide a personal guarantee on a business loan, you are personally liable to repay the debt if the business is unable to do so. It is important that you consider getting independent legal advice to ensure you understand the terms of any personal guarantee required by a lender.
  • Terms and conditions: If you breach any of the terms and conditions of a business loan, this could affect your business’s ability to borrow money again. For example, lenders will generally inform credit reference agencies when repayments are missed, so it’s important to understand the terms and conditions before you take out a loan and make sure you keep up to date with repayments.

If you own a seasonal business, a loan could help you to bridge the gap between your slow and busy seasons – but it’s important to make sure that this is right decision for you and your business. If you ever find that you are in financial difficulty, you should let your lender know as soon as possible so you can work together to find the best solution.

Find out more about business loans at LendingCrowd.

Article author

Gareth Mackie

Gareth Mackie

LendingCrowd is the trading name of Edinburgh Alternative Finance Limited, Company Number SC468392, authorised and regulated by the Financial Conduct Authority (Firm reference number 670991). LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.

The company's registered office is 23 Manor Place, Edinburgh, EH3 7DX.

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