Fiona's just bought her fabulous cafe - but it's looking a bit tired...
She's going to refurbish it, stripping out the old kitchen and replacing it with better equipment. The whole place will be decorated, and kitted out with furnishings as fabulous as the name. Once the refurbishment is completed, she'll get the business open and trading.
She needs £10,000 for the kitchen refit, £5,000 for decoration and furniture, and £3,000 to stock the cafe up ready to make sales.
Her loan for £18,000 is approved:
Payment one: immediately, £15,000 to refit and refurbish the cafe.
Payment two: when the refit is complete and the cafe is ready to open, £3,000 for stock.
It takes four months to get the cafe ready to open. In that time, Fiona's loan repayments were minimised, and when she came to open she still had her full £3,000 available to buy stock to launch with her full menu.