How do seasonal businesses manage loan repayments?

Seasonal businesses that operate in any sector, be a part of tourism, agriculture, or holiday retailing businesses, will experience variations in revenue that a seasonal business will go through, and these seasonal low periods can make meeting loan repayments difficult. Fortunately, there are several ways available to assist in times of reduced revenues:

Flexible Repayment Schedule: Some lenders may allow repayment schedules that follow the cash flow cycles of the business, allowing for lower loan payments in slower periods and higher loan payments in peak periods.

Moratorium Periods: A moratorium is a planned period of break in loan payments whereby the business enters into a pre-approved plan with the lender to not have payments for a period of time or times without penalties. In a moratorium there might be more interest that is accrued on the loan, and the moratorium can add to the overall length of the loan.

Working Capital Loans: A working capital loan could be relatively short-term like a line of credit and available to assist in funding all fixed costs of operation until revenue returns. It may provide a margin of repayment for x number of days until the business is cash positive during normal revenue, and provides a buffer for times when the business is not earning revenue.

Amendment: A seasonal business can request an amendment to the loan, whereby the lender is willing to entertain modifying the period of the loan or loan terms.

All seasonal businesses should make every effort to pre-plan, save reserves, and communicate proactively with lenders to be able to meet loan commitments. The practice of reducing loan repayments and communicating in a considered manner with lenders will keep any business "credit-variable" and give them the opportunity to secure loans in the future.