Why comparing offers matters

Two offers that both say “8%” can be very different in practice. Lenders vary on how they charge, the security they require, and the operational terms — all of which affect your cashflow and long‑term risk.

• Cost differences: headline rate vs APR vs total repayable.
• Fees: arrangement, monthly, early repayment and exit fees.
• Risk: security over assets, fixed charges, or personal guarantees.
• Flexibility: repayment holidays, seasonal repayment options, balloon payments.
• Fit: lender experience in your industry (construction, sustainability projects, asset finance).

Step-by-step guide: How to compare lender offers

1. Gather the same core information from each offer

Ask each lender or broker to provide the same set of details so comparisons are like‑for‑like. Create a simple spreadsheet with columns for:

• Headline rate and APR
• Term and repayment frequency
• Monthly repayment and total repayable
• Arrangement fee, ongoing fees, and any exit/early repayment charges
• Balloon payments or deferred capital
• Type of interest (fixed or variable)
• Security required and wording of any Personal Guarantees (PGs)
• Approval timeframe and conditions precedent

2. Compare cost properly — APR, fees and total repayable

APR gives a standardised measure of cost including interest and some fees, but it doesn’t always reflect the whole picture for business finance. To compare properly:

1. Calculate the total cash outflow: all fees + sum of repayments over the term.
2. Express total cost as a percentage of the loan to compare offers that use different fee structures.

Example: a £50,000 loan over 3 years. Lender A has a lower headline rate but a £2,500 arrangement fee and high exit charges. Lender B has a slightly higher rate but no arrangement fee and greater repayment flexibility — the total repayable figure may favour B. For asset or invoice finance, look at advance rates, discount fees and effective cost rather than APR.

3. Assess flexibility & risk — term, early repayment, covenants

Cost is important, but flexibility and covenants can determine whether a loan is manageable when your business has a slow period or a sudden contract. Ask:

• Can I make overpayments or settle early and what are the charges?
• Are repayments fixed, stepped or seasonal?
• What covenants are required (minimum cash balance, leverage ratios) and how are breaches handled?
• Does the lender allow refinancing or restructuring later?

4. Security, personal guarantees & director liabilities

Check precisely what security is being taken. Typical points:

• Secured vs unsecured: secured loans normally cost less but mean assets (or property) can be at risk.
• Personal Guarantees: understand triggers, extent (limited vs unlimited), and whether they are joint-and-several.
• Priority: does the lender take a first charge on property or second charge behind an existing lender?

For material security or guarantees, get independent legal advice before signing.

5. Non-cost factors: speed, sector experience & support

Speed to funding can be decisive for projects like construction or bridging funding gaps. Consider:

• Lender/broker track record in your sector (construction, sustainability projects, manufacturing).
• Responsiveness and availability of an account manager.
• Willingness to agree interim draws or staged funding for project finance.

6. Use a weighted scoring matrix (quick decision method)

Create a simple matrix in your spreadsheet with criteria such as Cost (40%), Flexibility (20%), Security Risk (20%), Lender Fit (10%), Speed (10%). Score each offer 1–10, multiply by weights and total the scores — a quick way to remove emotion from the decision.

Ready to see offers side‑by‑side? Get Quote Now — Free Eligibility Check.

Example comparison (worked example)

Below is a short hypothetical comparison to show how cost and terms can point to different choices depending on your priorities.

Interpretation: Lender B’s slightly higher rate but lower fees and no personal guarantee make it a better fit if you want to avoid director liability. Lender A may be cheaper for the business overall if you can accept the guarantee and security and prioritise lower headline interest.

Practical tips when talking to lenders & brokers

Keep these short checks handy when you speak to providers:

1. Ask for APR, all fees and a full repayment schedule in writing.
2. Get the exact wording of any security or personal guarantee before you commit.
3. Confirm whether the quote is indicative or conditional upon full underwriting.
4. Check whether a credit search will be performed and when.
5. Request a timeline to offer and to funding.
6. Ask for sample loan documents so your solicitor can review them.
7. Where relevant, ask how seasonal or stepped repayments are handled.
8. Get the name and contact details of the person who will manage your file.
9. Keep all communications and fee breakdowns for your records.

Remember: offers may be indicative until lenders complete checks against your accounts and documentation.

How UK Business Loans helps

UK Business Loans connects limited companies and growing SMEs to lenders and brokers who specialise in business finance from about £10,000 upwards. You complete a short enquiry; we match your requirements to partners with sector experience (construction, sustainability, manufacturing and more) who can provide tailored quotes and guidance.

We act as an introducer — not a lender or regulated adviser — and we pass your details only to selected partners who can help. For a broader overview of the products you can be matched to, see our business loans overview on business loans.

Typical response time: often within hours during business hours. Ready to get matched and receive multiple quotes? Get Started — Free Eligibility Check.

Red flags and when to get advice

Watch out for:

• Pressure to sign immediately or vague answers about fees and charges.
• Requests for upfront payments to secure a quote (UK Business Loans never asks for payment).
• No written terms, or refusal to provide sample agreements.
• Unclear lender identity or unverifiable credentials — ask for a company registration and contact details.

If you’re considering a large loan, property security or unlimited personal guarantees, seek independent legal and financial advice before signing.

Next steps & checklist

Use this quick checklist to move from quotes to funding:

• Collect full offers and put them into your comparison spreadsheet.
• Score each offer using the weighted matrix (Cost, Flexibility, Security, Fit, Speed).
• Call the lender/broker and confirm the timing and documents required.
• Ask your accountant/solicitor to review terms if security/PGs are involved.
• Notify the chosen lender and prepare documents to complete the application.

Complete our short form to get matched and receive quotes today — Free Eligibility Check.

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