Business loans with delayed first payment

Swoop is a credit broker and does not provide capital. We work with a range of companies to offer clear comparisons that allow customers to make choices on financial products & services. Swoop may receive a commission, which may vary by product but typically in the form of a fixed percentage of the loan amount. For certain lenders, we do have influence over the interest rate, and this can impact the amount you pay under the agreement.

Add a header to begin generating the table of contents

Page written by Chris Godfrey. Last reviewed on March 14, 2025. Next review due October 1, 2026.

In business, it makes sense to hold on to your valuable working capital as long as you can. Business loans with delayed payments can push the date of the first repayment instalment off by a few months, or even several years.

Add a header to begin generating the table of contents

What is a business expansion loan?

A delayed payment business loan is a type of financing where the borrower does not make payments immediately after receiving funds. Instead, repayment starts after a set period, called the deferment period – also known as a ‘payment holiday’.

Delayed payment loans are common in business equipment, vehicle and services deals, where the borrower pays nothing for the first month or so and then picks up the debt and pays it back with regular instalments. However, deferred payment financing may also be found in other types of commercial deal, such as real estate, inventory purchase and franchising.

Delayed payment loans can give borrowers time to stabilize financially before making payments. While beneficial for short-term cash flow management, delayed payment loans can lead to higher overall costs if interest compounds during the deferment period.

Example of a deferred business loan

A business wishes to buy a new truck under finance. The deal calls for a down payment of 10% plus repayment of the balance of the vehicle price paid back over 36 monthly payments.
Typically, the first payment would be due 30 days after taking possession of the truck, however, the vehicle seller offers a 30 days interest-free payment holiday, with no payment due until 60 days after taking possession.
The balance cost of the vehicle (100% less the 10% down payment) is now paid back over 35 payments instead of 36, which means the monthly repayment will be higher.
The interest-free 30 day deferment period means no extra interest has accrued.

How long can I delay my first payment?

How long you can delay before making your first payment depends on the type of deal you’re financing and the lender’s loan criteria. Most delayed payment loans will give the borrower a 30 days breathing space, but it may be possible to find financing where the first payment date does not arrive until 90 days or more after receipt of funds.

An exception to this rule would be loans from government departments, such as the SBA, where loans are given to help businesses after a natural disaster or a deep economic trough. In 2005, SBA loans were given to thousands of US businesses to help them recover from the impact of Hurricane Katrina and the first repayment was delayed for up to 4 years.

What are the interest rates for a delayed payment loan?

Interest rates on delayed payment business loans will vary from lender to lender, the type of deal that’s being financed and if collateral has been provided. The borrower’s credit score and business situation will also impact the interest rate. Some secured delayed payment loans may be obtained with interest rates as low as 5%, but borrowers seeking unsecured financing, or those who have less than perfect credit, should expect to pay more.

What are the pros and cons of a delayed payment loans?

Delayed payment loans have their advantages and disadvantages:

Pros:

Improved cash flow – Businesses can use funds immediately without immediate repayment pressure.
Growth opportunity – Can help businesses to invest in expansion, equipment, or inventory before revenue generation.
Flexible financing – Many lenders offer customized deferral periods based on business needs.
Easier startup funding – Ideal for new businesses that need time to generate income before making payments.

Cons:

Higher interest costs – Interest may accrue during the deferment period, increasing the total loan cost.
Potentially stricter terms – Lenders may charge higher interest rates or require personal guarantees.
Debt accumulation risk – Businesses may struggle with larger payments once the deferment period ends.

What types of delayed payment loans are available?

There are many types of delayed payment loan. Popular options include:

US Small Business Administration (SBA) loans are partially backed by the US government, which means they mayy come with lower interest rates and fees than many commercial loans.

SBA loans: (Collateral or a personal guarantee may be required).

SBA 7(a) Loans: The most common type of SBA loan, providing up to $5 million in funding with repayment terms of up to 25 years. These loans are 85% backed by the US government, which reduces the risk for lenders. However, strict eligibility criteria apply, and the approval process could take several months.
SBA Express Loans: Designed for faster approval, offering up to $500,000 with an approval decision typically made within 36 hours. Express loans are 50% backed by the U.S. government, which increases the risk for lenders and may result in higher interest rates and fees. The same eligibility criteria usually applies.
SBA Microloans: Available through nonprofit and community-based lenders, offering up to $50,000 with more relaxed eligibility requirements. This type of loan may be ideal for businesses that need smaller amounts of funding or who may struggle to qualify for traditional commercial financing

Term Loans

Term loans are the most popular type of commercial loan. Offered by traditional banks, credit unions and online lenders, these loans are typically used for one-off investments where borrowers know exactly how much cash they need. You receive a single, lump-sum cash injection and then pay it back in regular instalments over a fixed period of up to 25 years. Borrow up to $5 million. Collateral may be required.

Equipment Financing

With equipment financing, you use the asset you’re purchasing (such as vehicles, plant or machinery) as collateral for the loan. This type of borrowing is ideal for businesses with erratic cash flow or low working capital. Use the asset as you pay for it. Spread the cost over time. The machinery acts as security for the loan. In most cases, no added collateral is required.

Commercial mortgage

Commercial mortgages can be used to buy properties that have a business function, such as factories, offices, stores, restaurants, gas stations, gyms, theatres, sporting venues, etc.

Should I defer a business loan payment?

Choosing to defer a business loan payment depends on your financial situation. If you don’t need to defer, there’s no reason why you should, as doing to will typically increase the overall amount of interest you pay and the subsequent payments will be higher than if you had declined the deferment period. Clearly, if the lender is offering the payment holiday cost-free as a marketing promotion, then it may be worth taking, although once again, keep in mind that the monthly payments will be higher than if you hadn’t deferred your payment(s).

Things to be aware of when deciding to defer loan payments:

Always ask the lender what it will cost so there are no surprises down the road.
Will you be able to meet the higher instalment costs when the deferment period is over?

If you’re deferring loan payments because of cash flow or other financial issues, you should ask yourself if taking out a loan is a good idea at all. Never take on debt you cannot afford to repay.

How to apply for a delayed payment loan

Eligibility criteria for delayed payment loans varies by lender and the type of loan. However, common factors that influence qualification include:

Length of time in business: Most lenders prefer to work with businesses that have been in operation for at least two or three years. Start-ups may find it harder to qualify for a business loan, but microloans and grants may offer opportunities for new businesses.
Annual revenues: The financial performance of your organization plays a significant role in the loan approval process. Higher revenues generally indicate a lower risk for lenders, increasing your chances of success.
Credit score: Both personal and business credit scores are crucial. A higher credit score will result in better loan terms and interest rates. If your credit score is weak, you may do better by applying for loan programs designed for those with less-than-perfect credit.

What documents do you need to get a delayed payment business loan?

Typical documentation requirements include:

Business details: Basic information about your organization, including business licenses, permits and articles of incorporation.
Business plan: A detailed plan showing how the loan will help you grow or sustain your business.
Financial statements: Documents such as income statements, balance sheets, and cash flow statements.
Tax returns: Several years of personal and business tax returns.
Collateral information: If the loan is secured, full details of the collateral being used to support the loan (such as equipment or property) is essential.

Where to get a delayed payment business loan?

The interest rate, fees, and terms and conditions of delayed payment business loans can vary significantly. Shopping around before settling on a deal is essential. You can do this by approaching banks, credit unions and online lenders one by one over days, weeks, or even months, or you can use the services of a loan marketplace that can quickly introduce you to a choice of marketing loan from a range of lenders.

Some marketplace platforms can also give you advice and help you with the application process. This can be especially useful for business owners who have never taken out a commercial loan before.

Get started with Swoop

Working with business finance experts can make all the difference when applying for a business loan. Contact Swoop to discuss your borrowing needs, get help with your application and to compare high-quality delayed payment loans from a choice of lenders. Give your cash flow a welcome boost. Register with Swoop today.

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.

Swoop promise

At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.

Find out more about Swoop’s editorial principles by reading our editorial policy.