At a glance — Quick snapshot

Typical headline ranges and common fees in plain language. These are illustrative only — final offers depend on lender underwriting.

• Bank term / secured loans: ~3%–12% (headline rate)
• Unsecured term loans (alternative lenders): ~6%–30% (headline)
• Asset & equipment finance: ~4%–15%
• Invoice finance / factoring: 0.5%–2% per month (equiv. annual cost depends on usage)
• Overdrafts & business cards: variable, often 8%–20%+
• Merchant cash advances / short-term: effective costs can be very high — often significantly above other products

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We don’t lend. We match businesses seeking £10,000+ with lenders and brokers who specialise in the right product and sector. Tell us a few details and we introduce you — saving time and increasing the chance of a suitable offer.

Benefits: quick quotes, sector-focused matches (construction, sustainability, manufacturing, hospitality), and no-obligation contact from lenders/brokers. Start Your Enquiry.

What affects interest rates and fees?

Rates and fees reflect lender risk and cost. The main drivers are:

Lender type

Banks and large established lenders generally price more conservatively and may offer lower rates for low-risk businesses. Alternative or specialist lenders price in more risk and speed — often at higher cost.

Secured vs unsecured

Secured loans (asset-backed or property-secured) usually carry lower rates because the lender can recover losses from collateral. Unsecured loans are more expensive.

Business credit and trading history

Stronger business accounts and a clean credit profile reduce rates. Newer businesses or those with arrears typically see higher pricing.

Loan amount & term

Smaller, shorter-term loans often have higher effective rates. Larger facilities and longer terms can lower monthly repayments but may increase total interest.

Purpose & sector risk

Funding for stable investment (asset purchase) is cheaper than high-risk activities (bridging for development). Sectors like construction or hospitality can attract premium pricing due to sector risk or seasonality.

• Example: a lender may offer lower rates for asset finance to buy machinery than for an unsecured working capital loan.

Typical interest rate ranges by loan type

Ranges below are approximate and for guidance only. Always compare full costs (rates + fees).

Bank term loans / secured finance

Typical headline rates: approximately 3%–12%.

• Lower end applies to well-established businesses with security and strong accounts.
• Useful for medium-term investment or refinance.

Unsecured term loans (alternative lenders)

Typical headline rates: approximately 6%–30%.

• Faster decisioning and more flexible underwriting, but higher rates to reflect unsecured risk.

Asset / equipment finance

Typical rates: approximately 4%–15% depending on asset, age and term.

• Hire purchase and leasing structures may include admin fees and residuals.

Invoice finance (discounting / factoring)

Fees often 0.5%–2% per month on invoice value. Effective annual cost varies by advance rate, collection performance and facility fees — translating to roughly 6%–24% a year or more depending on use.

Overdrafts and business credit cards

Variable pricing — typically 8%–20%+. Overdrafts may also have arrangement or renewal fees.

Merchant cash advances / short-term cashflow lenders

Often priced as a factor rate (e.g., 1.15–1.5) or very short-term APRs that can be high. Treat these carefully — they can be significantly more expensive than traditional loans.

Bridging / property development finance

Higher risk product — typical rates 6%–15%+ depending on loan-to-value and project risk.

Worked example (illustrative only)

12-month £50,000 unsecured loan at 15% annual (amortising monthly):

• Monthly interest rate = 0.15 / 12 = 0.0125
• Monthly repayment ≈ £4,501
• Total repaid ≈ £54,015; total interest ≈ £4,015 (example only — exact figures depend on lender)

Typical fees and charges to expect

Fees often make a bigger difference than headline rates. Common fees include:

• Arrangement / facility fee: fixed (e.g. £100–£2,000) or percentage (commonly 0.5%–3% of the loan). Often deducted from funds or added to the balance.
• Upfront / documentation fees: small fixed sums (£50–£500) to cover admin and paperwork.
• Valuation & legal fees: for secured loans or commercial property — borrower normally pays third-party costs.
• Monthly admin / servicing fees: common for invoice and asset finance.
• Early repayment charges (ERC): can be 1%–5% of outstanding balance or a formula reflecting lost interest.
• Late payment & default fees: fixed penalties and/or higher default interest rates.
• Broker fees: sometimes charged to borrower or paid by lender — always check who pays and whether fees are refundable.
• Renewal / exit fees: for facilities like invoice lines or hire agreements.

Fee example

£100,000 loan with a 2% arrangement fee = £2,000 upfront. If rolled into the loan, that fee increases the effective cost — ask lenders for a total-cost illustration.

Comparing total cost: APR, interest vs fees

APR attempts to combine interest and certain fees into a single annual figure, but for many commercial products APRs are not directly comparable or mandatory. Instead:

• Ask for a full schedule showing headline rate, all fees, whether fees are deducted or added to the balance, and an example repayment schedule.
• Compare total repayments over the loan life rather than headline rate alone.

Simple comparison example (3-year term, illustrative only):

• Offer A: 6% interest + 2% arrangement fee on £50,000 = lower nominal rate but €1,000 fee.
• Offer B: 10% interest + no arrangement fee = higher headline rate but no upfront cost.

Depending on term and repayment pattern, Offer A may be cheaper overall — always run the numbers or ask a broker to illustrate.

How to get the best rates and reduce fees

Practical steps that can materially improve offers:

• Prepare up-to-date accounts, management accounts and a short cash-flow forecast.
• Offer suitable security (assets, property) to lower rate expectations.
• Use a broker or comparison route (we match you) to access multiple lenders quickly.
• Negotiate arrangement fees and ask for fee waivers or reductions.
• Consider consolidating higher-cost short-term debt into a lower-cost term loan.
• Choose the right product for purpose — asset finance for equipment, invoice finance for receivables — matching reduces perceived risk and price.

Compare offers — Get a free quote from lenders and brokers who specialise in your sector.

Why speak to UK Business Loans

We make the process quicker: one short enquiry connects you with specialists who understand your industry (construction, sustainability, manufacturing etc.) and the right product. Our service is free and no obligation — you decide whether to proceed after receiving quotes.

We typically arrange loans from £10,000 upwards. Get Started — Free Eligibility Check.

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Suggested short enquiry fields: Business name, turnover band, time trading, loan amount required, purpose of funds, contact name, phone & email.

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For more on small business lending options see our guide to small business loans.