How long can I borrow money for?

Typical terms for short-term finance

Short-term working-capital facilities are designed to be repaid quickly. In the market they commonly run from around three months to about 24 months, with many landing near the 12-month mark. These are typical ranges rather than a fixed Credicorp term — your schedule is agreed on your own circumstances.

This is deliberately shorter than a long-term bank loan or asset finance, which can stretch over many years. Short-term finance solves a near-term cash-flow need, so the term is sized to the gap, not to a long repayment horizon.

How to choose the right term

The guiding principle is to match the term to the purpose. Borrowing to fund a stock order that sells through in eight weeks? A short term fits, because the sales repay the loan. Smoothing a seasonal trough that recovers over two quarters? A longer term gives you breathing room until receipts return.

There's a real trade-off. A shorter term means higher individual repayments but less total interest. A longer term eases the monthly load but costs more overall and keeps debt on the books longer. The best term is the shortest one your cash flow can comfortably sustain.

Term, cost and flexibility

Because interest accrues over time, the term directly drives total cost — see how interest is calculated. A 6-month facility will normally cost less in pounds than a 12-month one for the same amount, even at the same rate.

Flexibility matters too. If your facility allows it, early repayment lets you shorten the effective term once cash arrives, cutting the interest you ultimately pay. Ask whether early settlement is penalty-free before you sign.

What this means for your company

Before agreeing a term, map it against your cash flow: when does the money that repays this loan actually arrive? Set the term to land just beyond that point, with a modest buffer. That keeps repayments affordable while avoiding the cost of carrying debt longer than you need.

If circumstances change, a clean repayment record often supports a renewal or a fresh facility down the line, so you don't need to over-stretch the term up front to stay funded.