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Payment Holiday vs Lumi Payment Pause

Everybody loves a holiday and taking a pause from everyday business operations. A holiday conjures images of sunlit beaches, palm fronds, and relaxing by calming waters. Small business owners tend not to take many holidays, some business owners are very hands-on with their operations.

Juggling servicing customers, generating invoices, restocking shelves, getting equipment repaired, and more! In the finance world, it’s hard to imagine putting the words holiday and repayments in the same breath. However, when it comes to some lenders, like Lumi or example, there are some exceptions. 

Some banks will offer lenders a way to pause their loan repayments, typically in a time of financial hardship. All lenders may have this option available and it can be called a payment holiday. Let’s explore what a payment holiday is, and the difference between a payment holiday and the Lumi Payment Pause

What is a Payment Holiday?

A payment holiday is an agreement made in advance with your lender to cease repayments for a desired period of time. This can be just for a one-off regular repayment or multiple payments. Although in some cases, such as the mortgage loan freeze that was offered by most major banks during the Covid-19 pandemic, a loan freeze can last longer. Some lenders have been known to offer up to 8 weeks for ceased payments. Although 4 weeks tends to be the normal approach for most financial institutions. 

A payment holiday is usually offered or asked for by a borrower during times of financial struggles and when there is a struggle to keep up with regular repayments. Although the lender may allow the borrower to have a break from making loan repayments, the big thing to note here is that interest will still accrue. 

How do you take a Payment Holiday?

To take a payment holiday, the borrower needs to make a plan with their lender in advance. The borrower will need to submit an application and follow a process for the payment holiday to be implemented. Below are some factors that should be considered before deciding to take a payment holiday from loan repayments. It can help you work out what is best for you and your business.

  • Check your loan agreement: firstly you will need to check that your lender offers the option of a payment holiday. This will normally be stated in the terms and conditions of the loan agreement.  If it is not then you can also discuss it directly with the lender.
  • Added costs: some lenders may discreetly add extra interest or larger account-keeping fees during the payment holiday period. This can lead to a higher total amount of interest paid.

What is a Lumi Payment Pause?

When it comes to taking a break from repayments, Lumi has tailored an excellent option that would meet the demands of almost any borrower, the Lumi Payment Pause

This is a 4-week interest-free break from repayments. The option to freeze repayments can be made at any time by your business, hassle-free. The big benefit of the Lumi Payment Pause is that it does not accrue interest while you are in the 4-week freeze. 

What are some reasons you may wish to pause your repayments interest-free? 

There may be sudden expansion opportunities. Even though business expansion may have been the reason for taking on the loan in the first place, an opportunity that requires just the amount of your repayment may occur suddenly. Whether it’s marketing or hiring staff. Knowing that your repayments can be ceased momentarily with ease is an excellent piece of mind. 

Sudden unexpected expenses may happen. This could be needing to replace equipment, repair vehicles, or move premises. During the pandemic many businesses were unable to pay leases, if landlords were not lenient, they could change the locks. This would leave a business in a very difficult predicament. Having the ability to pause any loan repayments to obtain another lease or pay for the sudden breakdown of equipment could be very useful.

Another reason may be reduced cash flow. It might be a slow season or you may have closed up shop for your own personal vacation. Whatever the case may be, if cash flow is really slow, putting the loan on hold can help to reduce overheads. 


For example, John the landscaper has taken on a small business loan of $40,000 before the summer which is typically the busy season to hire another tradesman and purchase new equipment and a second ute. He takes the loan on a 12-month contract and is easily making the repayments. However, 6 months into the repayments leading into the winter when business is slow he decides to take a much-needed month off to recuperate. For some financial peace of mind, John is able to pause his repayments interest-free for the 4 weeks he intends to take off so he does not need to worry about finances. 

What types of loans are available to a small business owner?

Unsecured small business loan 

A small business unsecured loan is a type of loan that requires no collateral to secure the loan. Lumi provides small business owners with unsecured business loans up to $300,000 with a repayment period from 12 – 36 months. The application process is quick and the money can even be provided on the same day. 

Line Of Credit

A line of credit is another small business flexible loan that works in a similar way to a personal credit card. Once you are approved for the funds, the line of credit will be available to your business. You can use it in any way you choose for your business. No interest charges will occur until you decide to draw down on the line of credit.

When you are ready to utilise one of the great loan solutions that Lumi provides, simply complete an application form online. You can find out more about the Lumi Payment Pause or one of the great Lumi products by getting in touch with our friendly loan specialists on 1300 00 Lumi.

Post Author: Danielle Sassine

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