What is a repayment holiday and when is it used?

2 min read

Payment pauseWhat it is

Interest accruesThe catch

Genuine squeezeWhen to use

What it means

A repayment holiday is an agreement with your lender to pause or reduce payments for an agreed spell — helpful when a temporary cash squeeze would otherwise cause a missed payment. It must be arranged in advance; simply not paying is arrears, not a holiday. Interest normally continues to accrue during the break.

When to use it

It suits a genuine, short-term dip — a delayed big payment, a seasonal trough — where a brief pause lets the business recover. Because interest accrues, the total repayable rises slightly and the term may extend, so it's a bridge, not a saving. Ask your lender early. A responsible lender offers it to customers in genuine difficulty as part of fair treatment.

What it means for you

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.

Frequently asked questions

Does a repayment holiday cost extra?

Usually a little. Interest typically keeps accruing during the pause, so the total repayable rises and the term may extend. It's a way to ease a short-term squeeze, not to reduce the overall cost of the loan.

How do I arrange a repayment holiday?

Contact your lender before you miss a payment and explain the situation. It must be agreed in advance — simply stopping payments counts as arrears. A responsible lender will discuss it for a genuine, temporary difficulty.