How to compare two business loan offers on true cost

Step 1 — get the total amount payable

Ask each lender for the total amount payable over the loan’s life — principal plus all interest. If a lender will not give it, treat that as a warning and calculate it yourself with the loan comparison calculator.

Step 2 — add every fee

Fold in the arrangement fee, any admin or documentation charge, and note whether the fee is deducted from the advance. A low rate with a fat fee can lose to a higher rate with none.

Step 3 — convert rates to a common basis

If one is a flat rate or factor rate, convert it to an APR so you are comparing like with like — see converting a flat rate to an APR.

Step 4 — check the term and the exit

Make sure both are over the same term, or adjust — a longer term lowers the monthly but raises total interest. Check each for an early-repayment charge in case you clear it early.

Step 5 — decide on total cost, then fit

Pick the lower total amount payable, then weigh non-price factors: speed, flexibility, and whether a personal guarantee is required.

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.