How the calculator works out your repayments
A fixed-rate business loan is repaid in equal instalments. Each period the lender charges interest on the balance still owed, at one twelfth of the yearly rate for monthly repayments (one fifty-second for weekly), and the instalment is set so the balance reaches zero at the end of the term. As the balance falls, less of each repayment is interest and more repays the loan.
Choose how often you repay. Weekly or fortnightly repayments reduce the balance a little faster than monthly repayments, so the total interest is slightly lower for the same rate and term. The calculator uses whole numbers of repayments, so a term that does not divide evenly is rounded to the nearest repayment.
Nominal rate, APR and flat rate
Pick the rate type your quote uses. A nominal rate is the yearly rate before compounding, divided across the repayments. An APR is the effective annual rate, so an 8% APR costs slightly less per month than an 8% nominal rate: £50,000 over five years with no fee is £1,007.15 a month at 8% APR, with £10,429.16 of interest.
A flat rate charges interest on the original loan for the whole term, not on the falling balance, so it is much more expensive than the same rate quoted as APR. A £20,000 loan at 6% flat over three years costs £3,600.00 in interest, or £655.56 a month, and works out at an APR of 11.66% once you allow for the balance falling as you repay. Always compare quotes on the APR with fees, not on a flat rate.
Arrangement fees: deducted, added or paid separately
Lenders handle the arrangement fee in different ways, and it changes both your cash and your cost. Deducted from the loan, the fee reduces what you receive but you repay the full amount. Added to the loan, you receive the full amount but borrow more and pay interest on the fee as well. Paid separately, you pay it from your own cash. Choose the option in your quote.
A 3% fee on a £50,000 loan is £1,500. Added to the loan, the balance becomes £51,500 and the repayment is £1,044.23 a month over five years, with £11,154.06 of interest and an APR of 9.66%. Add any fee charged with each repayment, and legal or valuation costs, and the APR includes them too.
Worked example: £50,000 over five years
Borrow £50,000 at 8% a year over five years, repaid monthly, with a 2% arrangement fee of £1,000 deducted from the loan. You receive £49,000. The repayment is £1,013.82 for 60 months, so you repay £60,829.18 in total, of which £10,829.18 is interest.
With the fee, the total cost of borrowing is £11,829.18, which is 23.66% of the amount borrowed. Because the fee reduces the cash you receive, the APR is 9.23%, higher than the 8% rate. After 12 months you still owe £41,527.99, having paid £3,693.83 in interest in the first year.
Interest-only start, weekly repayments and overpayments
An interest-only period lowers the early repayments but leaves the balance unchanged, so the later repayments are larger. On £100,000 at 9% over five years with the first 12 months interest-only and no fee, you pay £750.00 a month in year one and then £2,488.50 a month, and total interest is £28,448.20.
Repaying weekly cuts the interest a little: £50,000 at 8% over three years with no fee is 156 weekly repayments of £360.76, with £6,278.04 of interest. The APR is 8.32% because the weekly rate compounds slightly more often. Overpaying helps more. Adding £200 to every repayment on a five-year £50,000 loan with no fee clears it in 49 months, 11 months early, and saves £2,178.60 of interest.
Settling early and early repayment charges
Many lenders charge for repaying early, often a percentage of the balance, and the standard APR does not include it. Enter the month you plan to settle and the charge to see the cost. On a five-year £50,000 loan at 8% with no fee, settling after 24 months means repaying a balance of £32,352.82 plus a 2% charge of £647.06, and the total cost of the loan to that point is £7,331.55.
What this estimate leaves out
This is a planning estimate for a fixed-rate loan. It does not check your eligibility, the security or personal guarantees a lender may ask for, VAT on fees, a variable rate or changes to the rate during the term. Lenders may calculate interest daily or round payments differently, so the figures in your offer are the ones that count.
To work out an APR from a quote, use the business loan APR calculator.
To plan an early payoff, use the business loan payoff calculator.
Use the right country page
This page stays in pounds and uses UK terms: arrangement fee, APR as the effective annual rate, flat-rate quotes and early repayment charges. The country choices above the inputs open separate local pages. Choosing United States opens the US business loan calculator, which uses origination fees and quotes APR as the nominal annualised rate. The inputs reset and amounts are not converted.
Inputs for the business loan calculator
Loan amount
How much you want to borrow, before any fee is taken from it.
Rate type and quoted rate
Nominal rate, APR or flat rate, exactly as your quote states it.
Term
The loan term in years or in whole months.
Repayments
Monthly, fortnightly or weekly.
Interest-only period at the start
Months at the start when you pay only interest. Enter zero for none.
Arrangement fee
A percentage of the loan amount, and whether it is deducted, added or paid separately.
Fee with each repayment
A fixed account or servicing fee charged with every repayment.
Legal, valuation and other fees
Fixed costs paid in cash at the start.
Extra paid with each repayment
An overpayment added to every repayment after any interest-only period.
Settle the loan after
Months until you repay the whole balance. Enter zero to run to the end of the term.
Early repayment charge
A percentage of the balance you repay early. Enter zero if none.
CALCULATOR QUESTIONS
UK business loan calculator questions
How do you calculate business loan repayments?
Charge interest each period on the balance at the periodic rate and set a level instalment so the balance reaches zero at the end. £50,000 at 8% over five years is £1,013.82 a month.
What is the difference between a rate and the APR?
The APR includes compulsory fees and shows the cost as an effective annual rate. A 2% arrangement fee deducted from a £50,000 loan lifts an 8% rate to a 9.23% APR.
Is a flat rate cheaper than an APR?
No. A flat rate charges interest on the original amount for the whole term, so 6% flat over three years is about an 11.66% APR.
Should the arrangement fee be deducted, added or paid separately?
Use whichever your quote says. Added fees are charged interest, deducted fees reduce the cash you receive, and separate fees come from your own cash.
How much can overpayments save?
On a five-year £50,000 loan at 8%, £200 extra a month saves £2,178.60 of interest and clears the loan 11 months early.
Does the APR include early repayment charges?
No. The standard APR covers interest and compulsory fees, so check the early repayment charge separately and use the settle-early inputs.
What happens when I change country?
The United States option opens the separate US business loan calculator, in dollars, with origination fees and the US way of quoting APR. Your inputs are reset rather than converted.