How to Turn the Tables on Expensive Short-Term Debt
There’s a peculiar truth about business finance that no one really talks about: we think in terms of debt, but we live in terms of cashflow.
Same Loan, Different Terms
It doesn’t matter whether you're running a café in Carlisle or a creative agency in Leeds, if your monthly repayments are draining your coffers faster than you can say “merchant cash advance,” or "short term loan," you’ve got a problem.
Not necessarily with your business model. Not with your ambition. But with how your loan was structured.
Let’s break this down with a real example:
£150,000 loan
- Short-term (12 months): £15,368/month
- Short-term (24 months): £9,175/month
- BEF loan (60 months): £3,728/month
Same amount borrowed. Same business. Very different outcomes.
The illusion of speed: why short-term loans feel smart (until they aren’t)
Short-term finance is often sold like a sports car. Fast, exciting, and great for getting from A to B in a flash. But you wouldn’t take a Lotus Elise on a three-year supply run, would you?
What many business owners don’t realise (until it’s too late) is that high-speed finance comes with high-pressure repayments. Yes, it’s cash in the bank quickly but that speed means monthly payments that can cripple your working capital.
Which leads to the silent killer of perfectly good businesses: not lack of sales, but lack of breathing room.
Why cashflow is more important than capital
A wise CFO once said, “Profit is theory, cash is fact.” And I’d add: cashflow is the difference between staying in business and becoming a cautionary tale.
When your repayments are too high, you stop investing. You delay hiring. You lose sleep. You hoard instead of growing. And ironically, you become more vulnerable to the very thing you were trying to avoid – risk.
Refinancing a short-term loan with a longer-term, flexible option like a 5-year Small Business Loan from BEF isn’t just about lowering your monthly costs. It’s about restoring control.
So what does refinancing actually do?
Let’s not dress this up. Refinancing sounds dull. But what it does is rather exciting:
- Reduces your monthly outgoings
- Buys you time to execute your strategy
- Releases cash back into your business
- Improves your mental bandwidth
Imagine what you could do with the £5,000 difference each month. Pay staff on time. Run a campaign. Buy stock at a discount. Sleep.
And here’s the kicker
When your business is less stressed, it performs better. You negotiate better. You take smarter risks. You think more clearly. In other words, you don’t just survive, you build.
The BEF difference
At the Business Enterprise Fund, we’ve seen too many businesses trapped by short-term decisions made under pressure. That’s why our Small Business Loans go up to £250,000 over 5 years, giving you a chance to grow, not just cope.
We’re not just a lender. We’re your finance partner. That means we’ll:
- Take the time to understand your goals
- Help you structure repayments that fit your cashflow
- Support you throughout the term of your loan
This isn’t about bailing you out. It’s about building you up.
Final thought: Cash is king. And refinancing is the crown
If you’re currently sitting on an expensive short-term loan, don’t wait for it to eat into next month’s margin. The smart thing isn’t always the fastest. Sometimes, it’s the thing that gives you room to breathe.
Because when you give your business room to breathe, you give it room to grow.
Let's talk
If you’ve got a loan that’s causing you sleepless nights, get in touch. We’ll help you refinance it on terms that make sense for your business, and your sanity.