How to compare business finance options

Why headline rates mislead

The single biggest mistake directors make is comparing finance on the advertised rate alone. A loan quoted at "1.5% a month" and one quoted at an "18% APR" can cost almost the same in pounds — or wildly different amounts — depending on the term, the fees and how interest is calculated. Two offers with identical rates can differ by hundreds of pounds once you add an arrangement fee, an early-repayment charge or a different repayment frequency.

Short-term facilities make this worse, because annualising the cost of money you only borrow for eight weeks inflates the percentage while the actual pound cost stays modest. The fix is to stop comparing percentages and start comparing the total cash you hand over, plus the terms attached to it. The steps below give you a repeatable method.

Step by step: how to compare

Work through these in order for every option on your shortlist. Putting the answers side by side in a simple table makes the right choice obvious.

1. Define the job first. Write one sentence describing what the money is for and how long you need it. A one-off stock order, a recurring cash gap and a five-year asset purchase need completely different products.
2. Match the product to the job. A term loan suits a defined lump sum; a revolving facility suits unpredictable, repeating gaps; invoice finance suits cash locked in unpaid invoices.
3. Get the total cost in pounds. Ask each lender for the full amount repayable, including every fee, not just the rate.
4. Score the terms. Note the security required, whether a personal guarantee applies, early-repayment rules and how quickly you can draw funds.
5. Decide on fit, not just price. The cheapest facility is no use if it cannot release cash when you need it.

Build a like-for-like comparison table

Normalise every offer onto the same columns so you are genuinely comparing like with like. A useful layout:

What to capture	Why it matters
Total repayable (£)	The only figure that reflects true cost
All fees	Arrangement, origination, drawdown, exit
Term and repayment frequency	Affects cash flow and the pound cost
Security / personal guarantee	What is at risk if things go wrong
Early repayment	Can you save interest by clearing it early?
Speed to funds	Days vs weeks can change the answer

If a lender will not give you a clean total-repayable figure, treat that as a warning sign rather than an inconvenience.

Weigh the non-price factors

Price is necessary but rarely sufficient. Two factors routinely override a small rate difference. The first is security: a facility secured against your home, or one requiring a personal guarantee, carries personal risk that a marginally cheaper rate does not offset. The second is flexibility: a revolving line you draw and repay as needed can be cheaper in practice than a lump-sum loan, because you only pay for what you use.

Also weigh speed, the quality of servicing, and how the repayment shape sits against your cash cycle. A facility with weekly repayments can strangle a seasonal business even at a low rate. Our guide to short vs long-term finance and choosing a lender go deeper on matching structure to need.

Where Credicorp fits

Credicorp Limited provides short-term working capital to UK limited companies, lending to the company rather than to you personally — so there is no personal guarantee. When you slot a Credicorp facility into your comparison table, two columns stand out: the security column (company only, nothing of yours personally on the line) and the speed column (decisions geared to recent trading rather than property valuations).

To price it against your shortlist, ask for the total repayable in pounds and read the offer in full. You can explore our business loans, look at the flexible Credicorp Flex line, or register to apply. This page is educational, not financial advice.