Introduction
If you’re looking for information about business loan costs and rates, you’re in the right place.
In this guide, you’ll find out everything you need to know about what costs are involved and how you can find the best deal for you and your company.
Let’s take a closer look.
What’s in this guide?
FAQ
What is a business loan?
In short, it’s when you ask a lender like a bank to loan you some money so you can pay for things like more employees – in return, you will pay back this money often over a set period.
You might also have to pay interest, which is the payment you make to borrow the funds.
Low-interest loans mean that you are paying less to borrow the money, while high-interest rates or high APR means the cost of your loan is greater.
Often, a business loan can come from many different places, so as a business owner you should always try and consider as many possible solutions as possible to find the best deal.
What is an interest rate?
Interest rates refer to the percentage of the loan that will cost you for borrowing money.
For instance, according to the helpful calculator on the Barclays website, if you borrowed £25,000 for 24 months (2 years), your monthly repayments would be £1,137.08 a month.
This means you would be repaying a total of £27,289.92.
That is an 8.9% pa (fixed) – in other words, the interest costs you’re paying is £2,289.92.
You can opt to have a 6-month repayment holiday, which means you wouldn’t make any payments during the first six months, but it also means that you will incur interest during this time.
So if you do that, you’ll be repaying more in the long run.
What are arrangement fees?
Arrangement fees, in particular, are usually a percentage of your overall loan which is charged to you as a cost of your lender arranging your loan.
Lloyds Bank, for instance, state on their website that if you borrow £50,000, your arrangement fee will be around 1.5% which means you will be charged £75 on top of your interest and any other fees.
Spotcap, on the other hand, say that they charge between 2% and 3% of the loan you borrow, so with a £50,000 loan, you would be paying between £100 and £150.
Sometimes it’s worth taking a look at the different fees and working out whether a loan will end up costing you more than elsewhere, purely on the basis that the additional charges are too high.
What is a completion fee?
A competition fee is another word for arrangement fee, so it’s the term used to describe how much the company is charging you for arranging your loan.
What are early repayment fees?
Early repayment fees refer to the fee that you have to pay should you try and pay off your loan earlier than the end date that is expected.
Sometimes, lenders won’t charge you any of these fees, so you can pay off your loan in several larger lump sums if that would suit you better.
Sometimes, however, you may have to pay an amount to benefit from paying it off early.
That’s why it’s essential to check the terms and conditions of your loan in great detail before making any decisions.
What is APR?
Your APR or annual percentage rate take into consideration all of the fees that are associated with your loan.
This means including things such as the interest rate, arrangement fees, any initial costs and things such as when it’s charged.
That could be daily, weekly, monthly or even annually.
An APR gives you a full view of the costs associated with your loan, which makes it a perfect tool to use when comparing not only different loans but also different lenders.
As each lender will offer you different fees and rates.
How do I find the best deal?
- Always be truthful with your lender
- Compare all of your options and costs
- Make sure that you understand the terms and conditions
- Get advice at the right time
- Make full use of your assets if it makes sense for your business
What is a low-interest business loan?
A low-interest business loan is merely a business loan, but with a lower rate of interest, so you have fewer costs you need to repay
Interest is when you have to pay back a little extra regarding costs, as a payment for being able to borrow that amount of money.
Low interest means fewer costs that you have to pay back.
A business loan can come from many different places, so as a business owner you should always try and consider as many possible solutions as possible to find the best deal.
What are the best loans and costs on offer today?
| Company Name | Loan Amount that you can Borrow |
Representative APR | Loan Lengths |
| Funding Circle | £10,000 to £1,000,000 | – | Six months to 60 months |
| Ultimate Finance | £5,000 to £100,000 | 36.8% APR | Up to 12 months |
| Esme | £10,000 to £150,000 | 10.82% APR | 12 months to 60 months |
| Spotcap | £50,000 to £250,000 | 22.8% APR | One month to 24 months |
| Nucleus | £25,000 to £150,000 | – | Three months to 3 years |
| CubeFunder | £5,000 to £100,000 | 51.45% APR | Three months to 12 months |
| White Oak | £5,000 to £500,000 | – | Three months to 60 months |
| Yorkshire Bank | £10,000 to £150,000 | 12.8% APR | Six months to 60 months |
| Satago | £500 to £500,000 | – | One month to 4 months |
| Alius | £10,000 to £1,000,000 | 11.28% APR | Three months to 60 months |
Lender comparison
| Company | Trustpilot Score | Loan Amount | Loan Term | Typical APR |
| Barclays | ★ | Up to £25,000, and over £25,000 | Up to 20 years | 9.9% |
| Boost Capital | ★★★★★ | £3,000 – £500,000 | 4 to 18 months | 1.5% – 2.5% |
| Capify | ★★★★★ | £3,500 – £500,000 | 6 to 10 months | 67.89% |
| Shawbrook Bank | ★★★★★ | £250,000 to £25 million | Bespoke | 0% to 19.9% |
Conclusion
Have you found the best loan that suits all of your needs?
Take a look at the handy tool at the top of the page to learn more, or check out the ExpertSure guides which will tell you everything you need to know about the different lenders and loans that are on offer.
