How a 0% business loan works
On an interest free loan you repay the amount financed in equal instalments with no interest added, so the repayment is the amount financed divided by the number of instalments. The amount financed is the price less any deposit. If there are no fees, the total you repay equals the amount financed and the APR is 0.00%.
Fees change that. An admin or arrangement fee paid at the start means you receive less than the amount financed, and a fee with each repayment adds to every instalment. The APR in this calculator counts both against the cash you receive, so a 0% deal with fees shows a small but real APR. The calculator is for the cost of borrowing: it does not model VAT, which HMRC covers for instalment deals in its finance notice.
Worked example: £20,000 of equipment over 36 months
Take equipment costing £20,000 with a £2,000 deposit, repaid monthly over 36 months with a £150 admin fee and no interest. The amount financed is £18,000.00 and the repayment is £500.00 a month. The total of repayments is £18,000.00 and with the deposit and fee you pay £20,150.00 in all.
The £150.00 fee is 0.83% of the amount financed and gives an APR of 0.55%. A loan of £18,000 at 9% over the same 36 months would cost £572.40 a month and £2,606.23 in interest, so the 0% deal saves £2,456.23 once the fee is counted. With no fee the saving is the full £2,606.23 and the APR is 0.00%.
Weekly and fortnightly repayments
Choose weekly or fortnightly repayments to spread the same amount over more, smaller instalments. For £5,000 of stock with a £500 deposit, 12 months of weekly repayments and a £60 admin fee, you make 52 payments of £86.54 and the APR is 2.67%, because the fee is larger compared with the short term. A fortnightly deal on £18,000 over 18 months with a £4.50 fee on each repayment means 39 payments of £466.04, £175.50 of fees and an APR of 1.27%.
When a 0% deal is not the cheaper one
A big fee on a short deal can cost more than an ordinary loan. On £10,000 over 12 months with a £1,500 admin fee, the fee is 15.00% of the amount financed and the APR is 35.97%. Against a loan at 2% over the same 12 months, the 0% deal costs £1,391.34 more. When the 0% deal costs more, the calculator shows the extra cost instead of a saving.
Look at the fee, the term and whether the price is higher than the cash price. Suppliers can fund a 0% offer through the price, or by receiving less from the finance company than you pay, which is how HMRC describes interest free credit supplied through a third party. Compare the total you pay with the cash price.
Where interest free business finance comes from
Interest free business finance usually comes as a promotion by an equipment or vehicle supplier, or from a government-funded scheme. One example is the SME Loan and Cashback Scheme in Scotland, which the Scottish Government's mygov.scot page describes as offering interest-free loans to small and medium enterprises based in Scotland, up to £100,000 for renewable or energy efficiency projects, on a first-come, first-served basis while funding lasts. It was last updated on that page in July 2025, so check current availability and terms. Always check the full terms of any 0% offer, including fees, how long the offer lasts and what happens if you repay late.
To model a loan with interest and fees, use the business loan calculator.
To turn any offer into an APR, use the business loan APR calculator.
What this calculator leaves out
This is a planning calculator for a fixed agreement with equal instalments. It does not model VAT, a balloon or final payment, a charge for repaying early or a promotional rate that becomes interest-bearing after a set period. A lender's own quoted APR follows its own rules, so use the figures on your agreement.
Inputs for the interest free business loan calculator
Price of what you are financing
The full price of the equipment, vehicle or stock, before any deposit.
Deposit
Cash you pay up front. The rest of the price is spread over the term.
Term
How many months you take to repay, up to 120 months.
Repayments
How often you repay: monthly, fortnightly or weekly. The same total is spread over more, smaller instalments.
Admin or arrangement fee
A fixed fee paid in cash at the start. It is the main reason a 0% deal has an APR above zero.
Fee with each repayment
A fixed fee charged with every repayment, added to the instalment.
Compare with a loan at
The yearly interest rate of an ordinary loan for the same amount and term, with no fees.
CALCULATOR QUESTIONS
UK interest free business loan calculator questions
How do you calculate repayments on an interest free loan?
Subtract the deposit from the price and divide by the number of instalments. £18,000 financed over 36 months is £500.00 a month.
Does an interest free business loan have an APR?
It is 0.00% with no fees. With an admin fee or a fee with each repayment the APR is above zero. A £150 fee on the £18,000 example gives an APR of 0.55%.
How much does a 0% deal save compared with a loan?
The saving is the interest on the loan you would otherwise take, less the 0% deal's fees. Against a 9% loan the example saves £2,456.23 with a £150 fee and £2,606.23 with none.
Can a 0% deal cost more than a loan with interest?
Yes, if the fees are large. A £1,500 fee on £10,000 over 12 months costs £1,391.34 more than a 2% loan, and its APR is 35.97%.
Are there interest free loans for UK businesses?
Supplier promotions are the most common. Scotland's SME Loan and Cashback Scheme is a government-funded example, with interest-free loans of up to £100,000 for energy projects. Check availability, because the page describing it was last updated in July 2025.
Does it matter if I repay weekly instead of monthly?
The total of repayments is the same with no interest. Fees and the term change the APR: £5,000 of stock over 12 months of weekly repayments with a £60 fee has an APR of 2.67%.
Is this a quote?
No. It is an illustration from the figures you enter, and VAT is not included. Use the figures on your own agreement.