What a cash flow loan is and what this calculator covers
A cash flow or working capital loan is short-term borrowing to cover wages, stock, tax bills or a gap while customers pay. Lenders often base it on turnover and trading history, and the term is usually a few months to a few years. Some lenders charge an annual interest rate, some quote a flat rate, and some charge a single fixed fee on the advance.
This calculator repays the amount in equal monthly or weekly instalments. It does not model a repayment that moves with your sales, an overdraft, invoice finance or a revolving facility, and it does not check eligibility.
Worked example: £20,000 over 12 months
Borrow £20,000 at a 12% nominal annual rate over 12 months, repaid monthly, with a 2% arrangement fee of £400 deducted from the loan. You receive £19,600. The repayment is £1,776.98 for 12 months, so you repay £21,323.71 in total, of which £1,323.71 is interest.
With the fee, the total cost of borrowing is £1,723.71, which is 8.62% of the amount and an average of £143.64 a month. Because the fee reduces the cash you receive, the APR is 17.06%, well above the 12% rate. Compare offers on APR and total cost, not on the headline rate.
Interest rate, flat rate or fixed fee
A nominal rate is charged on the balance you still owe. A flat rate is charged on the full amount for the whole term, so it costs far more than the same rate quoted as an interest rate. A fixed fee is a single charge on the advance, such as 6% of the amount. This page treats a fixed fee as a flat charge repaid in equal instalments, so the fee is the same however the term is set.
An 8% flat rate over nine months on £20,000 is £1,200.00 of interest and a repayment of £2,355.56 a month, with an APR of 15.14%. A 6% fixed fee of £1,200.00 repaid weekly over six months (26 weeks) is £815.38 a week, and the APR is 25.42%. The same fee costs more as an annual rate the faster you repay it, so the APR changes with the term you enter.
Arrangement fees and other costs
An arrangement fee can be deducted from the loan, added to it or paid separately in cash. Add legal or other fixed costs separately. On £12,500 with a 3% fee of £375 added to the loan, a 12% nominal rate and 24 months, you owe £12,875.00 at the start, repay £606.07 a month and the total cost is £2,045.70, an APR of 16.07%.
On £80,000 at 9.5% over 36 months with a 1.5% fee paid separately and £450 of legal costs, you need £1,650.00 in cash at the start. The repayment is £2,562.64 and the total cost of borrowing is £13,904.90, an APR of 11.50%.
Interest-only months to ease cash flow
Some lenders allow interest-only repayments at the start. The balance does not fall during those months, so the later repayments are larger. On £45,000 at 15% over 18 months with the first three months interest-only and a 2% fee deducted, you pay £562.50 a month at first and then £3,308.69. Total interest is £6,317.86, the total cost is £7,217.86 and the APR is 18.81%. Interest-only months are not modelled for flat-rate or fixed-fee quotes.
Finding the interest rate from a quoted repayment
A lender sometimes quotes only the repayment. Choose Quoted repayment (find the rate) under how the lender prices it, then enter the amount, the term and the repayment, and the calculator finds the yearly interest rate that gives it. Take £20,000 over 12 months with a 2% arrangement fee deducted and a quoted repayment of £1,800 a month. The implied interest rate is 14.45%, you pay £21,600 in total, the interest is £1,600, the arrangement fee is £400 and the APR with fees is 19.95%. The same £20,000 at a 12% rate costs £1,776.98 a month, so the quote is about 2.45 points dearer.
It works for weekly repayments too: £15,000 over 8 months repaid weekly at £440 for 35 weeks, with the same 2% fee deducted, implies a rate of 7.64% and repayments totalling £15,400. The repayment must be more than the amount spread over the term, or the rate would be negative, and it cannot be more than a 100% yearly rate would need.
What this estimate leaves out
This is a planning estimate for a fixed agreement. It does not model a repayment that changes with your card or sales takings, a variable rate, daily interest, personal guarantees, security or the lender's eligibility checks. Lenders may round payments or calculate interest differently, so the figures in your agreement are the ones that count.
For overpayments and early settlement, use the business loan calculator.
To work out an APR from a quote, use the business loan APR calculator.
Use the right country page
This page stays in pounds and uses UK terms: cash flow loan, arrangement fee, flat rate and APR as the effective annual rate. The country choices above the inputs open separate local pages. Choosing United States opens the working capital loan calculator, which uses origination fees and quotes the APR as the nominal annualised rate. The inputs reset and amounts are not converted.
Inputs for the cash flow loan calculator
Amount to borrow
The cash the business needs, before any fee is taken from it.
How the lender prices it
A nominal annual rate, a flat rate per year, a fixed fee on the advance or a quoted repayment, as in your quote.
Rate or fee
The yearly rate, or the fixed fee as a percentage of the advance.
Regular repayment you were quoted
Used when you choose Quoted repayment. The repayment on the advance, before other fees; the calculator finds the nominal yearly rate that gives it.
Term
The number of months you take to repay, from 1 to 60.
Repayments
Monthly or weekly. Weekly repayments suit short advances.
Interest-only months at the start
Months when you pay only interest. Enter zero for none.
Arrangement fee
A percentage of the amount, and whether it is deducted, added or paid separately.
Legal and other fees
Fixed costs paid in cash at the start.
CALCULATOR QUESTIONS
UK cash flow loan calculator questions
How do you calculate a cash flow loan repayment?
Charge interest each period on the balance and set a level repayment so it reaches zero at the end. £20,000 at 12% over 12 months is £1,776.98 a month.
How do I find the interest rate on a cash flow loan?
Choose Quoted repayment, enter the amount, term and the repayment you were quoted, and the calculator finds the nominal yearly rate. £20,000 over 12 months repaid at £1,800 a month implies 14.45%.
What is the difference between a flat rate and an interest rate?
A flat rate charges interest on the whole amount for the whole term, so it costs far more. An 8% flat rate over nine months on £20,000 is £1,200.00, an APR of 15.14%.
How is a fixed fee turned into an APR?
The calculator treats the fee as a flat charge repaid in equal instalments over the term you enter. A 6% fee repaid weekly over six months is an APR of 25.42%, and a longer term lowers it.
Why is the APR higher than the interest rate?
The APR includes fees. A 2% arrangement fee deducted from £20,000 lifts a 12% rate to a 17.06% APR.
Can I repay a cash flow loan weekly?
Yes. Choose weekly repayments and the calculator uses a whole number of weeks for the term. Weekly repayments reduce the balance a little faster than monthly ones.
What happens when I change country?
The United States option opens the separate working capital loan calculator, in dollars, with an origination fee and a nominal APR. Your inputs are reset rather than converted.