We try to keep pricing as simple as a short-term loan can be. There are three things to understand — the daily interest, the one-off fee, and the cap that sits over the top of everything. This article explains each, with a worked example, so there are no surprises when you see your figures.
The three parts of the price
| Part of the cost | What it is |
|---|---|
| Daily interest | 0.25% per day, charged on the outstanding balance. Because it is daily, paying down sooner reduces what you pay. |
| Establishment fee | A single £5 fee, charged once when the loan is set up. It is not a monthly or repeated charge. |
| Total cost of credit cap | Whatever happens, the total cost of credit is capped at 100% of the amount you borrow — you will never repay more than double the principal. |
A worked example
Take a loan of £500 over 84 days. The interest works out at £105, plus the one-off £5 establishment fee, so the total to repay is £610. Expressed as a representative APR that is about 137%, which sounds large only because APR annualises a cost that you actually carry for a few weeks — see what APR means on a short-term loan. The figure that matters in practice is the total cost of credit, and you see it in pounds before you sign.
The 100% cap applies to a single agreement no matter what — including if a payment is missed. A missed payment may add a single late fee, but there is no penalty interest rate, nothing compounds, and the cap still holds. So the worst case is always knowable in advance.
What is not charged
- No charge for applying, and no charge for being declined.
- No monthly account or servicing fee.
- No penalty-rate uplift if you fall behind, and nothing compounds.
- No personal-guarantee cost, because we never take one — see fees if a payment is missed.
Paying early
Because interest is charged only for the days you hold the balance, settling early stops the rest of it. On a one-time Business Loan an early-settlement charge of up to 28 days' interest may apply; in many cases we waive it, and the exact amount (if any) is always shown in your settlement figure before you confirm. See repaying your loan early.
Every figure here is shown in full on your Key Information Sheet and in your Business Loan Agreement before you sign — see what the Key Information Sheet shows. Pricing is set on the company and may vary; the exact numbers for your offer are the ones in your quote. Because this is lending to a company for business purposes, it sits outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001 and is not covered by the Financial Ombudsman Service or the FSCS.
See also: Are there fees for paying off my facility early?, Can my rate or charges change during the term?, Do you charge any hidden fees?.