2 min read
Illustrative only. Assumes a fixed rate and equal monthly repayments (annuity). Your actual offer depends on Credicorp’s assessment of your company.
The two building blocks
A variable rate is a reference rate — usually compounded SONIA or the Bank of England base rate — plus a credit margin. On “base + 4%”, the base rate is the moving part and the 4% is fixed for the life of the loan.
What sets the margin
The margin is set by risk-based pricing: your credit score, trading history, security and interest cover. A stronger application earns a thinner margin — and that is the part you can influence.
What you can and cannot negotiate
You cannot move the reference rate — it is the market’s cost of money. You can move the margin by presenting a stronger case. That is why preparing your accounts and credit file before applying pays for itself. See how to lower the APR you are offered.
Stress-test the moving part
Because the reference rate can rise, model a higher rate before you commit. Use the calculator to see how a base-rate rise of 1–2% would change your payment.
Where Credicorp fits
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.
Frequently asked questions
Can I negotiate the reference rate?
No. It tracks the wider cost of money and is the same for everyone. You negotiate the margin on top of it.
Is a fixed rate the reference rate plus margin too?
A fixed rate is priced from the same building blocks but then locked for a period, so the reference part cannot move until the fixed period ends.
How do I lower my margin?
Improve what the lender sees: clean credit file, up-to-date accounts, strong cash position and cover. A better risk profile earns a thinner margin.
Related reading
Reference rate
Reference rate is the benchmark a variable loan is priced against, such as SONIA or the base rate, before the…
Read →
Credit margin (loan margin)
Credit margin is the fixed spread a lender adds above the reference rate, reflecting your risk, the lender’s…
Read →
How Commercial Loan Pricing Is Structured: Margin, Base Rate, and Fees
The headline interest rate on a commercial loan is only one component of pricing — arrangement fees, exit…
Read →Fixed vs variable rate business finance
A fixed rate buys certainty; a variable rate buys flexibility — and the right choice depends on how much…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.