Contracting for large organisations can be good business, but big clients often pay on their own timetable, and a single late invoice can be a lot of money to a small company. This is the story of an IT-contractor company, a one-person limited company, managing exactly that. It is an anonymised, illustrative example. The business, the people and the figures are invented and the details have been changed to protect privacy, though the situation and our product are real.
A reliable client, a slow process
The company is a single-director limited company providing IT consultancy to business clients, including one large enterprise on a rolling contract. The work was delivered and invoiced on the client’s standard terms. The enterprise was entirely reliable about paying, but its procurement and finance process was slow, and over a holiday period the payment was going to run a couple of weeks past its usual date.
Meanwhile, the company had its own commitments: a software licence renewal it needed for client work, and the director’s modest salary through the company payroll. The money to cover both was contracted and certain; it was simply going to arrive after these costs fell due. A short, defined gap, not a shortfall.
Open Banking made the picture clear
When the company applied online, the director connected the company’s bank account through Open Banking. This let us see the company’s recent trading and confirm the regular contract income directly from the bank data, securely and with the director’s consent, rather than relying on paperwork alone. It made the affordability picture clear quickly and meant we could reach a decision without delay. If you want to understand how that works and why it is safe, see what is Open Banking and is it safe?.
As always, we lent to the company, not to the director, and took no personal guarantee. Alongside the bank data, we ran a business credit check on the company and an identity check on the director.
What the company borrowed
The company borrowed a small, round amount within our published range of £50 to £500, over a short term timed to the enterprise client’s payment. Before signing, the director saw the amount borrowed, the term, the total amount payable and the full repayment schedule on the Key Information Sheet (KIS) and in the Business Loan Agreement. We do not quote a consumer APR and we invented no charge; the full cost was on the paperwork in advance. The licence was renewed, the payroll ran on time, and client work continued uninterrupted.
How this is regulated, briefly
Because we lend to a company rather than to an individual, this lending sits outside FCA consumer-credit regulation, under Article 60B FSMA RAO 2001. That has a practical consequence worth knowing: this product is not covered by the Financial Ombudsman Service or the FSCS. If something ever goes wrong, you raise it through our internal complaints process, and the final route after that is the courts rather than an ombudsman. We think it is only fair to be upfront about that, so there are no surprises.
The honest view
Bridging a late invoice is sensible only when you are confident the invoice will be paid, and soon. Here the client was a reliable enterprise and the payment was contracted, so the risk was timing, not default. Short-term borrowing is more expensive than waiting, so it suits a gap of days or a few weeks, not a client who routinely pays months in arrears. For recurring late payment, the better answers are structural, and alternatives to short-term lending covers them, while when not to take a short-term business loan is worth reading if a payment is ever in real doubt.
How it ended
The enterprise paid as expected, a little over a fortnight late, and the company repaid the loan from that money on schedule. The director told us that connecting the bank account made the whole thing quick and transparent, and that the loan did one clean job: it kept the business running normally while a big, slow-paying client caught up. For a genuine, short, well-understood gap, our business loans page sets out what we currently offer.
