2 min read
Sizes the working-capital buffer a seasonal business needs to cover its lean period.
Why averages mislead
A seasonal business might generate ample cash across a year yet run thin for months at a time. An affordability check built on the annual average makes the loan look comfortable when, in the off-season, the repayment could exceed the cash coming in. The average is exactly the wrong number to trust.
Size against the quiet months
The safe approach is to check that repayments are affordable during your leanest weeks, not your busiest. If cover holds through the trough, it holds all year. This usually means borrowing a little less, or over a longer term, than the annual figures would suggest.
Structure for the season
A seasonal buffer or a revolving facility you draw only when needed often fits better than a fixed term loan with level payments. Match the shape of the borrowing to the shape of your cash. See planning for seasonal cash flow.
Keep a bridge for the off-season
Build a buffer during the peak so the quiet months are funded from reserves, not fresh borrowing. The best time to arrange seasonal finance is before you need it, when your recent trading is strong and affordability is easy to demonstrate.
Model the trough
Use the calculator to test repayments against your quietest month's cash.
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Frequently asked questions
How do I check affordability if my business is seasonal?
Test the repayment against your quietest months, not the annual average. If cover holds through the off-season trough, the loan is genuinely affordable across the whole year.
Should a seasonal business use a term loan?
Sometimes a revolving facility or seasonal buffer fits better, letting you draw only when cash is tight and repay in the peak. Match the shape of the borrowing to the shape of your cash flow.
When should I arrange seasonal finance?
Before you need it — ideally when recent trading is strong and affordability is easy to show. Arranging in the trough, when cash is thin, is harder and often more expensive.
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