Compare business loans: the six things that decide what one costs
Most people compare business loans on the headline rate, and the headline rate is the number a lender has the most room to dress up. Two offers at the same rate can be thousands of pounds apart once the fee, the term and the early repayment terms are in. This page sets out the comparison: six things to put side by side, a worked method, and a worked side-by-side.
The six things to compare
- 1
Total repayable, not the rate
Add the arrangement fee to the amount borrowed, then multiply the monthly payment by the months. That one figure is what the loan costs. A 5% arrangement fee on £50,000 is £2,500 before you have paid a penny of interest, and it is easy to miss on a quote that leads with a rate.
- 2
How the interest is charged
An annual rate on a reducing balance, a monthly rate and a flat rate on the original sum are three different measures. A flat rate is the one that catches people: 5.9% flat over five years works out at about 11.2% a year once you express it as an APR, because you keep paying interest on money you have already repaid.
- 3
The term, and what it does to the monthly figure
A longer term buys a smaller payment and costs more in total; a shorter one raises the payment and lowers the total repaid. The monthly figure set against a quiet month is worth seeing before you choose the term.
- 4
Early repayment
If you might clear the loan early, from a contract paying out or a better facility, ask what that costs. Some lenders charge the remaining interest, some a fixed number of months, some nothing. On a three-year loan repaid after one, the difference between those three answers is most of a year of interest.
- 5
Security and the personal guarantee
Unsecured means no charge over a specific asset, not no recourse. Nearly every unsecured business loan carries a personal guarantee from a director, and some carry a debenture over the company as well. Read what the guarantee covers, whether it is joint, and whether it survives a change of ownership. Secured borrowing pledges something specific, and amounts and pricing vary by lender and product.
- 6
What happens if a payment is late
The default rate, the fee for a missed payment, and how quickly a lender escalates are all in the agreement and almost never in the quote. A month that goes wrong is when you find out what you signed, so read that clause before the good one.
Speed is a seventh point. Lenders publish different decision times as well as different prices, and both sit on the panel; we show what each lender offers so you can weigh the two for yourself.
Two offers, side by side
Example figures, not quotes, and no lender is named. Two offers for the same £50,000, laid out the way we lay them out on the call.
| Offer A | Offer B | |
|---|---|---|
| Amount | £50,000 | £50,000 |
| Arrangement fee | £2,500 (5%), added to the loan | None |
| Term | 36 months | 60 months |
| Monthly payment | £1,700 | £1,050 |
| Total repayable | £61,200 | £63,000 |
| Cost of the money | £11,200 over 3 years | £13,000 over 5 years |
| Repaid early after 12 months | Remaining interest charged in full | Balance only, no penalty |
Offer A costs £1,800 less over its life and £650 a month more while it runs. Offer B keeps the monthly payment lower, which matters if a quiet quarter would put the £1,700 at risk, and its early settlement terms differ: A charges the whole remaining interest on the way out and B does not. Neither is cheaper in general. Which one a particular business can carry depends on its particular months, which is why the comparison is set out for you to decide rather than decided for you.
Secured or unsecured, at a glance
Unsecured
- No charge over a specific asset; a personal guarantee is the norm.
- Each lender publishes its own decision time, and there is nothing to value.
- Sized on turnover, profit and the bank statements rather than on an asset.
- Terms from a few months to about five years.
Secured
- A charge over company property, often a second charge behind an existing commercial mortgage.
- Loan size and term are set against the property as well as the business.
- Weeks rather than days, because the security is valued and the legal work runs.
- The asset is at risk if the loan is not repaid.
The business loans page covers what lenders look at on each; this page is about comparing the offers once you have them.
Questions people ask when comparing
What is the quickest way to compare two business loan offers?▼
Put the total repayable side by side, not the rate. Add the arrangement fee to the loan, multiply the monthly payment by the number of months, and compare those two totals. Then check the two things the total hides: whether you can clear it early without a penalty, and what the personal guarantee covers. Ten minutes with a calculator settles most of it.
Is a lower monthly payment a cheaper loan?▼
Usually not. A lower payment normally means a longer term, and a longer term means more months of interest. On the same £50,000, spreading it over five years instead of three can cut the monthly figure by a third while adding several thousand pounds to what you repay in total. Which term to take, set against what the business can afford each month, is your decision.
Why do two lenders quote rates that look nothing alike?▼
Because they are not measuring the same thing. One quotes an annual percentage on the reducing balance, another a monthly rate, and another a flat rate on the original sum. A flat rate roughly doubles when you convert it to an APR, so 5.9% flat over five years is about 11.2% a year. Convert everything to total repayable before you compare.
Do you send my case to every lender?▼
No. We have access to a range of commercial finance lenders through our lender panel, including unsecured and secured business lenders. We do not send your case to all of them. We check their published criteria against your figures first and, once you agree, put it only to the lenders whose criteria it meets.
Can I compare business loans with bad credit?▼
Yes. Adverse credit usually narrows the field and raises the rate, and where each lender draws the line is its own decision: some accept minor adverse, fewer go further. Tell us what is on the file before we look, because a default a lender finds is worse for you than one you told us about.
Does comparing loans through you affect my credit score?▼
No. Enquiring does not affect your credit score. If you apply to a lender, it runs its own credit search, which may be recorded on your file. We check your figures against the lenders' published criteria before anything is submitted, and many lenders run a soft quotation search first while some record a hard search at application, so ask each lender when its search is recorded.
What does CapExpand charge for this?▼
We are a commercial finance broker, not a lender. We will receive commission from lenders; the commission model, calculation and amount will be disclosed to you throughout your customer journey. If your figures meet no lender’s published criteria, we say so on the first call and you have lost nothing but ten minutes.
Start a business loan enquiry
Two minutes on the form or one call. We check your case against the unsecured and secured lenders on the panel, put it only to the lenders whose criteria it meets once you say so, and lay the offers out the way the table above does. Finance arranged for UK limited companies and LLPs.
Sources
- British Business Bank, finance options for smaller businesses: the products and how each is structured, read 21 September 2026.
- BVA BDRC, SME Finance Monitor: the share of bank loan applications declined, which is why criteria are checked before an application goes in.
- Bank of England, Bank Rate: the base the variable-rate products on the panel price over (3.75%, unchanged since 18 December 2025).
- GOV.UK, finance and support for your business: the public schemes worth checking before you borrow commercially.