Cashflow loans — can you repay early, and will lenders charge early repayment fees?

Summary: Early repayment of a cashflow loan is often possible, but whether it’s sensible or cheap depends on the product and the lender’s contract. Some lenders charge early repayment fees (fixed fees, percentages, sliding scales or buy‑out charges for merchant cash advances), while others allow penalty‑free exits after a set period or on negotiated terms. UK Business Loans introduces businesses to vetted lenders and brokers and can help you compare settlement/exit terms before committing — start with a Free Eligibility Check to get tailored options.

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Quick answer (TL;DR)

Yes — in most cases you can repay a cashflow loan early, but the terms vary by product. Some lenders apply early repayment charges (a percentage, flat fee, or a buy‑out amount for MCAs), while others allow penalty‑free exit after an initial period or on negotiated terms. UK Business Loans introduces you to lenders and brokers so you can compare settlement figures before you commit. Get Quote Now.

What is a cashflow loan?

A cashflow loan is any short‑to‑medium term facility designed to support working capital — to cover payroll, purchase stock, meet seasonal demand or bridge gaps between invoices and receipts. Common forms include short‑term term loans, overdrafts and revolving lines, invoice finance/factoring, merchant cash advances (MCAs) and other receivables‑based products. These facilities are typically arranged for businesses requiring funding of £10,000 and upwards.

Early repayment matters because repaying sooner can reduce interest costs but may trigger contractual early repayment charges or affect funds held by the lender (for example, retentions on invoice finance).

Learn more about cashflow lending options and how different products behave in practice by exploring our cashflow loans pages (for example, our guide to cashflow loans).

Does “early repayment” apply to cashflow loans?

Short answer: yes — but it depends on the product type and the loan agreement.

How early repayment is treated varies significantly by product:

• Short‑term business loans / term loans: Usually repaid in installments; most lenders will accept an early full repayment but may charge an Early Repayment Charge (ERC) or break cost stated in the contract.
• Overdrafts and revolving facilities: Typically flexible — you repay by reducing the balance; formal ERCs are uncommon, but there may be account closure or notice requirements.
• Invoice finance / factoring: Early termination often requires notice and may incur termination fees; the lender may retain a percentage of collected funds (retention) until contractual release conditions are met.
• Merchant cash advances (MCAs): Repayments are taken as a percentage of card receipts. Early repayment is possible by buying out the advance with a lump‑sum payment, but buy‑out figures can be expensive and are set out in the agreement.
• Revolving credit facilities: These are normally more flexible and may permit ad‑hoc or scheduled prepayments; arrangement or renewal fees can apply.

Do lenders charge early repayment fees?

Yes — many lenders charge fees for early repayment, though the form and scale vary. Typical fee structures include:

• Fixed percentage of outstanding balance: A one‑off percentage (e.g. 1–5%) applied to the balance at the time of settlement.
• Sliding scale: A percentage that decreases the further into the term you are (higher fee in early months, lower later).
• Flat administrative fee: A set charge to cover paperwork and administration.
• Break costs / interest adjustments: For lenders with hedged or fixed interest positions, they may pass on the cost of closing out the position — more common on longer‑term fixed‑rate facilities than simple cashflow lending.
• Retention and termination fees (invoice finance): Factor may hold back a retention percentage until client obligations expire or outstanding disputes are resolved.
• MCA buy‑out fee: A negotiated lump‑sum often calibrated to expected remaining repayments and the provider’s margin — can be high compared to term loans.

All valid lenders must disclose charges in the facility agreement, the Fee Schedule and any pre‑contract Key Facts document. Always request a written redemption/settlement figure before you make payment.

Important checks before repaying early

Before you pay — stop and ask these things.

• Request a formal redemption or settlement statement in writing showing the figure and the date it is valid to.
• Confirm whether the settlement amount includes all fees, VAT and any third‑party costs.
• Check for any required notice period and the precise method to give notice (email/portal/registered post).
• If there is security (charged against assets or personal guarantees), confirm what’s required to obtain release of security and whether charges remain on title until paperwork is complete.
• For invoice finance, check for retention amounts, chargebacks and dispute handling.
• For MCAs, ask how the buy‑out figure is calculated (factor vs discounted sum) and whether you’ll receive confirmation that the contract is closed.
• Get final confirmation in writing that the facility is closed and there are no further obligations.

Always compare the interest you’ll save by repaying early with the cost of any early repayment charge — sometimes partial prepayments or refinancing are better options.

How UK Business Loans helps

UK Business Loans is an introducer. We don’t lend or give regulated advice — instead we connect businesses with lenders and brokers to help find the best funding solution for your needs. Our service is free to use and no obligation.

We can help you:

• Identify lenders or brokers who openly publish early repayment terms or offer flexible exit options.
• Request and compare written settlement/redemption figures from multiple providers.
• Match you with specialists experienced in your sector and funding amount (from £10,000 upwards).

Our simple process:

1. Complete a short enquiry (takes about 2 minutes).
2. We match you with relevant lenders and brokers.
3. Receive quotes and settlement terms — then compare and decide.

Free Eligibility Check — Get Quote Now

Negotiation tips & saving money by repaying early

• Negotiate before signing: Ask for specific early repayment terms (fixed cap, tiered fee or penalty‑free window).
• Ask for partial prepayment options: Some lenders accept partial repayments that reduce interest without triggering ERCs.
• Compare buy‑out figures: If you intend to exit an MCA or invoice finance facility, get multiple redemption quotes to find the cheapest buy‑out.
• Refinance smartly: If the early repayment charge is lower than the interest you’d otherwise pay, refinancing can make financial sense.
• Use a broker: Brokers can obtain settlement figures on your behalf and sometimes negotiate reduced exit fees.

Example (illustrative): If a lender charges a 3% ERC on an outstanding £50,000 after three months (£1,500) but you’d save £2,000 in remaining interest, repaying may still be beneficial. Always obtain exact figures.

Typical examples

Frequently asked questions

Can I always pay off a cashflow loan early?

Not always in the same way. Most lenders allow early repayment but the contract will state whether an Early Repayment Charge applies, how it’s calculated, and any notice required. Always request a written settlement figure.

How are early repayment fees typically calculated?

Fees can be a fixed percentage, a sliding percentage based on term remaining, a flat admin fee, or a buy‑out amount (common for MCAs). Invoice finance may include retentions or termination charges.

Will repaying early hurt my credit score?

Repaying a loan early generally does not harm your credit score and may improve it. However, check if lenders perform any final credit actions (most simply record settlement). Your new lender may perform fresh credit checks if refinancing.

How do I get an accurate settlement figure?

Contact your lender and request a written redemption or settlement statement valid to a specific date. A broker can get this for you on your behalf.

Can UK Business Loans find lenders who reduce or waive early repayment fees?

We introduce you to a panel of lenders and brokers. While we don’t guarantee fee waivers, comparing multiple offers and using broker negotiation increases the chance of finding more flexible exit terms.

Will repaying early always save me money?

Usually repaying early reduces future interest, but you must compare the interest saved with any early repayment fees to confirm net savings.

Compliance & next steps

Important: UK Business Loans is an introducer — not a lender or regulated financial adviser. We connect businesses with lenders and brokers who can provide quotes and contract terms. This page is for information only and does not constitute regulated financial advice. Always obtain written settlement figures and read your contract carefully.

If you’re ready to compare early repayment terms and ask lenders for settlement figures, start with a quick enquiry — it’s free and no obligation: Free Eligibility Check.

1. Can I repay a cashflow loan early?
Most cashflow loans can be repaid early, but whether it’s allowed and at what cost depends on the product and the lender’s contract.

2. Do lenders charge early repayment fees on cashflow loans?
Many lenders do charge early repayment fees—these can be fixed percentages, sliding scales, flat admin fees, retention/termination charges for invoice finance, or buy‑out sums for MCAs.

3. How are early repayment fees calculated?
Early repayment fees are typically a percentage of the outstanding balance, a sliding scale based on term remaining, an administrative flat fee, or a negotiated buy‑out figure for MCAs.

4. How do I get an accurate settlement or redemption figure?
Request a written redemption/settlement statement from your lender (or ask a broker to obtain one) that is valid to a specific date before making any repayment.

5. Can I buy out a merchant cash advance (MCA) early?
Yes — MCAs can usually be bought out with a lump sum, but buy‑out figures are often high and should be compared across providers.

6. Will repaying early always save my business money?
Not always — you must compare the interest you’d save against any early repayment charges and related costs to see if early repayment is beneficial.

7. Will repaying a loan early affect my credit score?
Repaying a loan early generally won’t harm your credit and may improve it, though refinancing lenders may run fresh credit checks.

8. What should I check before repaying a cashflow loan early?
Obtain a written settlement figure, confirm it includes all fees and VAT, check notice periods and security release requirements, and verify facility closure in writing.

9. Can UK Business Loans help me compare early repayment terms and settlement figures?
Yes — UK Business Loans introduces you to trusted lenders and brokers who can provide and compare written settlement figures and negotiate exit terms on your behalf.

10. Will submitting an enquiry to UK Business Loans affect my credit score or cost me anything?
No — submitting an enquiry is free, does not affect your credit score, and is only used to match you with suitable lenders and brokers.