How the estimated rate is calculated
A business loan's quoted interest rate and its total cost are different measures. This calculator estimates the annualised rate implied by the cash you receive and the equal repayments and fees you enter. It also shows the underlying payment rate and total cost, so you can compare offers on consistent assumptions.
For monthly payments, it solves for the monthly rate and compounds it over 12 periods for an effective annual estimate. For weekly payments, it uses the exact number of weekly repayments you enter and annualises over 52 weeks. Fees paid at the start or with each repayment are included in the cash flows. UK prescribed APR rules use their own charge definitions and timing assumptions; this tool does not model every statutory rule or actual payment date, so its estimate can differ from a lender's disclosed APR.
Worked example: £50,000 at £1,013.82 a month
A £50,000 loan repaid at £1,013.82 a month for five years has an interest rate of 8.00% and an estimated APR of 8.30% with no fees. With a 2% arrangement fee of £1,000 deducted from the loan, you receive £49,000 and the estimated APR rises to 9.23%, so the fee adds 0.93 percentage points.
You repay £60,829.20 in total, of which £10,829.20 is interest. With the fee, the total cost of borrowing is £11,829.20, which is 23.66% of the loan. The equivalent flat rate, the interest as a share of the original loan for each year, is 4.33%.
Where the arrangement fee goes
A fee can be deducted from the loan, added to it or paid separately. TSB publishes a representative example for a £13,000 business loan over 60 months, with £273.12 monthly repayments and a £250 arrangement fee, at 9.94% APR. This calculator estimates 9.94% when that fee is added to the balance; the starting balance is £13,250.00 and the implied interest rate is 8.70%.
On the £50,000 loan, a 3% fee of £1,500 added to the loan lifts the repayment to £1,044.23 and the estimated APR to 9.66%. On £80,000 over three years at £2,549.70 a month, a 1.5% fee paid separately plus £450 of legal costs means £1,650.00 in cash at the start and an estimated APR of 11.11%, with an interest rate of 9.15%.
Flat rates and fixed fees
A flat rate charges interest on the whole amount for the whole term, so its estimated APR can be much higher than the quoted flat rate. A 6% flat rate over three years on £20,000 is £3,600.00 of interest and a repayment of £655.56, with an interest rate of 11.08% and an estimated APR of 11.66%.
A fixed fee is a single charge on the loan. An 8% fee on £15,000 repaid in 26 equal weekly payments is £1,200.00, a payment of £623.08 and an estimated APR of 34.99%. The same fee costs more as an annual rate the faster you repay it, so compare the estimate and total cost.
A fee with every repayment
Some lenders add an account or servicing fee to every repayment. A £15 fee with each repayment on the £50,000 loan, in addition to the 2% arrangement fee, takes the total fees to £1,900.00 and the estimated APR to 9.91%. Enter the fee in its own field so it is counted in the estimate and the cost.
What this calculator leaves out
This is a planning calculator for a fixed agreement with equal repayments at regular intervals. It does not model a variable rate, an interest-only start, a balloon payment, early repayment charges, irregular payment dates or a repayment that changes with your sales. A lender's disclosed APR follows applicable rules for the product and cash flows, so it can differ from this estimate. Check the figures in your offer.
To model a loan from its rate and fees, use the business loan calculator.
To see only the interest, use the business loan interest calculator.
Use the right country page
This page stays in pounds and uses UK terms such as arrangement fee and flat rate. The result compounds the periodic rate into an effective annual estimate. The country choices above the inputs open separate local pages. Choosing United States opens the US business loan APR calculator, which uses an origination fee and a nominal annual estimate. Inputs reset and amounts are not converted.
Inputs for the business loan APR calculator
Amount borrowed
The loan amount on the offer, before any fee is taken from it.
How the offer is priced
A regular repayment, a flat rate per year or a fixed fee on the loan.
Regular repayment
From the offer. Used when the offer is a regular repayment.
Flat rate or fixed fee
A percentage: the flat rate per year or the fixed fee. Used when the offer is a flat rate or a fixed fee.
Term and repayments
Enter years or months for monthly repayments, or the exact payment count for weekly repayments.
Arrangement fee
A percentage of the loan, and whether it is deducted, added or paid separately.
Fee with each repayment and other fees
A fixed fee charged with every repayment, and fixed costs paid in cash at the start.
CALCULATOR QUESTIONS
UK business loan APR calculator questions
How do you estimate the annual rate of a business loan?
Find the periodic rate at which the repayments repay the cash you receive after fees, then annualise it. £1,013.82 a month on £50,000 over five years with a £1,000 fee deducted gives an estimated 9.23%. This is not a lender's disclosed APR.
What is the difference between the interest rate and the APR estimate?
The interest rate is charged on the balance. This fee-inclusive estimate also reflects the cash you receive after fees, so it can help compare offers under the same assumptions. A 2% fee lifts an 8.00% rate to an estimated 9.23%.
Is this the APR a lender must disclose?
No. This is an estimate from the cash flows and fee assumptions you enter. A lender's disclosed APR can use different charge definitions, dates and regulatory rules.
How much does a 2% arrangement fee add?
On £50,000 over five years a £1,000 fee adds 0.93 percentage points to the estimated APR.
Why is a flat rate more expensive than it looks?
Interest is charged on the full amount throughout, not on the falling balance. A 6% flat rate over three years gives an estimated APR of 11.66%.
How do I compare a fixed fee with a rate?
Enter the fee and exact weekly payment count. An 8% fee over 26 weekly payments gives an estimated annual rate of 34.99%, because the fee is fixed whatever you repay.
What happens when I change country?
The United States option opens the separate business loan APR calculator, in dollars, with an origination fee and a nominal annual estimate. Your inputs are reset rather than converted.