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• 03 Oct

  How To Get A Business Loan Extension

  

  Extending a business loan is possible. Below are some tips to help you get a business loan extension. This phrase can have multiple meanings.

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  Extending Business Loans

  On the one hand, an extension can mean increasing the term of your loan - this is the most common use of the phrase. The term is the period of time over which the lending is to be repaid. For example, the term could be 5 years. This means that you have to make regular repayments such that the amount borrowed (and any interest and fees charged) are cleared after 5 years of repayments.

  Increasing The Term

  That timescale, or term, may be able to be increased to say 10 years. Whilst this might involve you paying more interest over the course of repayment, it is also likely to reduce the value of your individual repayments. If you are making repayments monthly, this could substantially reduce your monthly outgoings and improve your cash position.

  Increasing The Sum Lent

  On the other hand, the phrase can mean increasing the value of your loan or the sum lent to you. For example, if your loan was for £100,000 you could extend or increase it by borrowing an additional £10,000. This may be by increasing the value of the existing borrowing, or it may be by taking out an additional loan.

  How To Get A Business Loan Extension

  The steps that you take to get a business loan extension depend upon which of the above options you are trying to select.

  If you are looking to change the value or term of an existing loan, you will need to speak to your existing lender to renegotiate the terms. They may do this as an adjustment to the existing financial instrument, for example in the case of increasing the loan term. Alternatively, they may just make a second loan alongside the first, e.g., when seeking an increase in the capital sum. 

  Another option is to search the loan market for an alternative lender that may be able to provide additional funds independently of your first loan. It may be that another lender can offer improved terms or make additional funds available in a situation where the original lender is unable to help. 

  Additional Funding

  In a situation where you are seeking additional funds, i.e., an increase in the amount borrowed, there are different approaches that a new lender may take. Firstly, they may issue a top-up loan whilst leaving your original funding as it was. Alternatively, they could provide increased funding such that your original loan is repaid and the new funder provides a larger, new loan.

  Alternative Finance

  There are also other sources of business funding, such as alternative finance, that you might want to consider instead of lending. For example, many companies use receivables financing (also called invoice finance, invoice discounting or factoring) to release the cash that is locked up in their sales ledger.

  Money from this source can be used in addition to existing borrowing or it can be used to repay any existing lending. This type of funding operates in a different way from lending. The funds that you draw down are not repaid by making regular repayments. The funds are repaid when your customers pay the credit invoices that you have issued to them in respect of goods or services that you have provided.

  By Glenn Blackman