Why business loan APRs vary
Business lenders don't always quote an APR, and fees vary widely. Working out the APR yourself puts different offers on the same basis.
The calculator finds the monthly rate at which your payments exactly repay the money you actually receive, then turns it into an annual rate including the effect of compounding: APR = (1 + monthly rate)^12 − 1. Fees paid upfront reduce the money you receive, so they push the APR up.
Worked example
A £50,000 loan repaid at £1,013.82 a month for 5 years has an APR of 8.3% with no fees. With a £1,000 arrangement fee, it rises to 9.2%.
Other costs
Some business finance uses a factor rate or fixed fee instead of interest. Convert the total repayable into monthly payments and use this calculator to compare.
Inputs for the business loan APR calculator
Amount borrowed
The amount of the loan.
Upfront fees
Any arrangement or other fees you pay at the start, or that are taken from the loan. Enter 0 if there are none.
Monthly payment
Your regular monthly repayment from the quote or agreement.
Term
How many years the payments last.
CALCULATOR QUESTIONS
Business loan APR calculator questions
Do business loans have to show an APR?
Not always. Working it out yourself helps compare offers.
How much does a 2% arrangement fee add?
In the example, a £1,000 fee on £50,000 adds about 0.9 percentage points to the APR.
What's the difference between APR and the interest rate?
The interest rate is what's charged on the balance. The APR also includes compulsory fees and the effect of compounding, so it's the better figure for comparing deals.
Can I compare factor-rate loans?
Yes, by entering the equivalent monthly payments.