In the case of seasonal activity, your business naturally faces significant cash flow gaps. A seasonal loan is a short-term loan that allows you to maintain your cash flow and manage your liquidity during slow periods. How do you set it up? What are its advantages and disadvantages? Duration, interest rate, guarantee: we'll explain everything.
What is a campaign credit?
Seasonal financing is a short-term loan specifically designed to meet a company's occasional or seasonal cash flow needs. It guarantees cash flow throughout the operating cycle.
It is particularly suited to businesses with cyclical or seasonal activity. This includes businesses in seaside or winter sports resorts, construction companies, and sectors such as toy sales, food processing, agriculture, and tourism, where sales periods are highly concentrated.
What can you finance with a campaign loan?
You can use a campaign loan to finance:
purchases of raw materials or inventory before a peak period;
operating expenses (salaries, rent, social security contributions, taxes, etc.) while awaiting payments;
costs related to manufacturing products before they are marketed;
sales or marketing campaigns;
expenses related to shipping or distributing goods;
discrepancies between your expenses incurred and your expected revenue…
What are the advantages of campaign financing?
Campaign credit offers several advantages, allowing you to:
pay your expenses without waiting for your income;
borrow larger amounts than with an authorized overdraft;
secure your cash flow;
benefit from an interest rate that is often more advantageous than an authorized overdraft;
use the available funds freely within the defined limits and duration;
pay fees only on the amounts actually used.
How to apply for campaign funding?
As with any loan, obtaining it is subject to a creditworthiness assessment.
Your business account manager will therefore review your application using the documents you provide. They will examine your revenue, operating cycle, type of business, and working capital requirements.
Together, you will determine the type, amount, and terms (including the duration) of your seasonal loan based on your business needs. The amount granted is generally linked to the amount of cash deposited with the bank and is most often for a period of 6 to 12 months, renewable as needed. The interest rate can be fixed or variable.
Your bank may require you to provide personal collateral, such as securities or a life insurance policy.
Once the loan is approved, your bank will make the agreed-upon amount available in your bank account. You can then use all or part of this amount as needed. For optimal cash management, regularly check your bank remotely for a clear, real-time overview of your credit: track available amounts and upcoming due dates.
How much does it cost?
Campaign loans generate the following charges:
application fees, also known as setup, modification, renewal, update, or annual review fees, depending on the bank;
interest related to the use of the short-term loan; this is calculated based on the amount used per day.
How do I cancel my campaign loan?
To terminate a seasonal loan, simply inform your bank advisor and repay any outstanding overdraft and debit interest.
Your bank may also unilaterally decide not to renew or terminate the loan. Depending on the circumstances, your bank will notify you by mail of the termination or reduction of this financing. It must provide a minimum notice period of 60 days to allow you time to make the necessary arrangements.
