Commercial finance: typical interest rates & fees — construction & sustainability business loans

Summary (quick answer): UK Business Loans connects businesses (loans from around £10,000 and upwards) with specialist lenders and brokers. Typical interest rates vary widely by product and risk: commercial mortgages ~3.5%–6.5% p.a.; development & bridging 6%–18% p.a. (often quoted monthly); asset finance 3%–15%; invoice finance charged as 0.5%–2.5% of invoice value per advance; unsecured lending and merchant cash advances can carry much higher effective APRs. Arrangement, monitoring, valuation, legal and exit fees also apply and materially affect total cost. Submit a Free Eligibility Check to get personalised, up-to-date quotes from matched lenders and brokers: Free Eligibility Check.

Quick snapshot — typical interest rates & fees

At a glance: indicative ranges by product. These are market ranges—exact pricing depends on your business and the lender’s risk appetite.

Loan type	Typical interest (indicative)	Typical fees
Commercial mortgage	3.5%–6.5% p.a. (fixed/variable)	Arrangement 0.5%–2%; valuation & legal fees
Development finance	6%–18% p.a. (0.5%–1.5% per month common)	Arrangement 1%–3%; monitoring & exit fees
Bridging loan	6%–18% p.a. (0.5%–1.25% monthly)	Arrangement 1%–2%; exit fee up to 1%
Asset / equipment finance	3%–15% p.a.	Admin/doc fee £150–£1,000; deposit or balloon possible
Invoice finance (factoring)	0.5%–2.5% of invoice value per advance	Set-up fee; monthly service fee; reserve retention
Unsecured loans / MCA	6%–30%+ APR / factor rate 1.1–1.5	Origination, fixed admin fees; effective APR may be high

Note: These are typical ranges seen across our partner panel. For construction-specific or sustainability-focused finance, specialist lenders may offer tailored pricing—learn more about commercial finance options for projects and assets on our commercial finance resource: commercial finance.

How UK Business Loans partners set rates and fees

Lenders and brokers price facilities based on a combination of borrower and deal factors. Key drivers include:

• Loan size and term — larger, longer-term loans often secure lower margins.
• Security & LTV — lower loan-to-value (LTV) usually lowers interest rates.
• Sector & project risk — construction and development are higher risk; sustainability projects with proven cashflow (e.g., commercial solar) may attract competitive deals.
• Borrower credit profile and track record — stronger business accounts and director history reduce costs.
• Repayment profile — interest-only facilities, staged drawdowns and monitoring raise admin costs.
• Market base rate — many products follow a base rate (e.g., bank rate or LIBOR/SOFR-linked margin).

Understand the difference between nominal rate, monthly quoted rate and APR. APR attempts to show the annual cost including certain fees and is useful for comparing standard loan products; for many commercial short-term products (development, bridging) lenders quote monthly or per-period rates and separate arrangement/exit fees — you must model total cost across the term.

Get a personalised quote — it only takes a couple of minutes to submit your details and see realistic pricing for your situation.

Typical rates & fees by commercial finance product

Below are practical, indicative ranges you’ll commonly see from UK lenders and brokers. Examples are illustrative — request a personalised quote for accurate pricing.

Commercial mortgages (owner-occupied / commercial buy-to-let)

Typical fixed or tracker rates: 3.5%–6.5% p.a. for standard SMEs with clean accounts. Larger loans (six or seven figures) and strong security can secure better margins.

• Arrangement fee: 0.5%–2% of loan (often minimum £1,000–£5,000).
• Valuation and legal fees: payable upfront or added to the facility.
• Early repayment charges: may apply on fixed-rate deals.

Example: a £500,000 mortgage at 4.5% with 1% arrangement = annual interest ~£22,500 plus a £5,000 arrangement fee.

Development finance

High risk and short-term — rates reflect that. Typical: 6%–18% p.a. (commonly quoted monthly at 0.5%–1.5% on drawn balances). Interest is usually rolled or paid monthly, with interest-only during construction and staged drawdowns.

• Arrangement: 1%–3% of facility.
• Monitoring and milestone valuation fees: fixed per inspection or percentage based.
• Exit fee: 0%–1.5% on completion or when repaid.

Example: £750k development facility with monthly interest 1.0% on drawn sums = high effective annual cost; add monitoring fees and arrangement fees when modelling total cost.

Bridging loans

Short-term property or cashflow bridging: 6%–18% p.a. (0.5%–1.25% monthly typical). Suited to quick settlements or temporary funding gaps.

• Arrangement: 1%–2%.
• Exit fee: often up to 1%.
• Valuation & legal: additional.

Asset & equipment finance

Used for plant, machinery, vehicles and specialist equipment. Typical rates: 3%–15% p.a. depending on asset age, residual value and term.

• Documentation/admin fee: £150–£1,000.
• Deposit or balloon payments reduce monthly cost.

Invoice finance (factoring & discounting)

Cost depends on advance rate, service level and debtor risk. Typical charges:

• Fee per advance: 0.5%–2.5% of invoice value.
• Monthly service fee and set-up fee; reserve account retained against bad debts.

Unsecured loans & merchant cash advances (MCA)

Unsecured business loans can range widely: 6%–30%+ APR depending on credit and term. MCAs use factor rates (e.g., 1.1–1.5) — these have high effective APRs and should be compared carefully.

• Origination fees, fixed admin fees and sometimes early repayment or redemption charges.
• Risk warning: MCAs can be very expensive when expressed as APR.

Other commercial products

Overdrafts and working capital lines: typical arranged rates 6%–20% APR plus unused facility fees. Sustainability-specific finance (solar, EV infrastructure) can attract competitive asset-backed or lease rates — specialist lenders may offer concessionary pricing where cashflows or government incentives reduce perceived risk.

Typical fees to watch for (and how they affect cost)

Fees can materially change the real cost of borrowing. Ask lenders for a full, itemised fees schedule and an illustrative repayment example.

• Arrangement / facility fee: deducted or payable up-front; often percentage of facility.
• Underwriting / origination fee: one-off charge for credit assessment.
• Valuation & monitoring fees: common on property/development loans; paid at milestones.
• Legal fees & disbursements: borrower usually pays; can be several hundred to several thousand pounds.
• Exit / early repayment charge: percentage applied on repayment before term.
• Admin/documentation fee: fixed charge for processing.
• Broker fee: sometimes applied — check whether broker fees are payable by you or by the lender.

Microcopy: always confirm whether fees are added to the loan (increasing interest-bearing balance) or paid up-front from your funds.

How to fairly compare offers

Use this checklist when comparing quotes:

• Ask for an illustrative repayment schedule showing interest and all fees for the full term.
• Check whether the quote is interest-only or capital-and-interest.
• Confirm which costs are paid up-front and which are capitalised.
• Compare effective monthly cost for short-term products (development/bridging) rather than APR only.
• Review covenants, personal guarantees and security required (LTV limits, charges on property).
• Assess lender experience in your sector (construction, sustainability projects, etc.).

For a matched shortlist of lenders and brokers that understand your industry and cost drivers, complete a Get Quote Now form — free and no obligation.

Tips to reduce your cost of borrowing

• Improve your financials and credit profile before approaching lenders.
• Reduce LTV or provide stronger security to secure a lower margin.
• Choose a longer term to lower monthly interest, but model total interest paid.
• Negotiate arrangement and exit fees — some lenders will reduce or waive them.
• Use asset finance for equipment purchases to preserve cash and sometimes access favourable tax treatment.
• Work with specialist lenders for construction or sustainability projects — sector expertise often improves pricing and speed.

Start your enquiry — we’ll match you to partners who can help lower your overall cost.

Why use UK Business Loans

We do not lend. We are an introducer that helps UK businesses (loans from around £10,000 upwards) find the best lender or broker for their needs. Our value:

• Speed: quick matching to specialist partners who understand your sector and loan purpose.
• Choice: access to a panel covering commercial mortgages, development, bridging, asset & invoice finance, and more.
• Free & no obligation: submitting an enquiry costs nothing and will not affect your credit file.
• Confidential: we only share details with lenders/brokers likely to deliver relevant quotes.

Free Eligibility Check — tell us what you need and we’ll match you to the most suitable partners.

Compliance, transparency & disclaimers

Important: UK Business Loans is an introducer that connects businesses with lenders and brokers. We do not lend money or provide regulated financial advice. Rates and fees on this page are indicative only; actual pricing is set by each lender or broker and depends on the specific circumstances of your business and the deal.

All financial promotions should be clear, fair and not misleading. Before agreeing to any offer, ask lenders for a full fees schedule and an illustrative repayment plan. Submitting an enquiry via our form does not perform a credit check—lenders may carry out credit checks only when you proceed with a formal application.

Frequently asked questions

Will submitting an enquiry affect my credit score?

No. Completing our enquiry is a soft, no-obligation step and does not trigger a credit search. Lenders or brokers will only run credit checks if you progress to a formal application.

Do the rates on this page include all fees?

No. Rates shown are indicative ranges. Always request a full, itemised fees schedule and an example repayment illustration before accepting any offer.

Can businesses with imperfect credit still get commercial finance?

Yes — some specialist lenders and brokers work with lower credit scores or complex situations. Expect higher margins and additional security in many cases.

How quickly will I get a quote?

After you submit the enquiry, matched partners typically respond within hours during business hours; full offers depend on documentation and any valuations required.

Does UK Business Loans only work with FCA-regulated partners?

We introduce you to a range of lenders and brokers. If regulatory status is important to you, ask your matched partner for details about their authorisation and compliance before proceeding.

Get started

Ready to compare commercial finance options and get personalised pricing? Complete our short enquiry now for a free eligibility check — we’ll match you to lenders and brokers who can provide tailored quotes and guide the next steps. No obligation.

Get Quote Now — Free Eligibility Check

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Author: Content Team, UK Business Loans | Last reviewed: 01 Nov 2025. Sources & methodology: market pricing surveys, partner quotes and industry reports. Figures are indicative and updated periodically; request a personalised quote for current rates and fees.

1) What typical interest rates can I expect for a UK business loan?
Typical rates vary by product — commercial mortgages ~3.5%–6.5% p.a., development & bridging 6%–18% p.a. (commonly 0.5%–1.5% per month), asset finance 3%–15%, invoice finance 0.5%–2.5% per advance and unsecured/MCA products carry much higher effective APRs.

2) What fees should I watch for when comparing commercial finance offers?
Watch arrangement/facility, underwriting/origination, valuation, monitoring, legal, admin/documentation and exit/early repayment fees — these can be charged up‑front or capitalised and materially increase total cost.

3) Will submitting an enquiry with UK Business Loans affect my credit score?
No — completing the enquiry is a soft, no‑obligation step that does not trigger a credit search; lenders or brokers may run credit checks only if you proceed to a formal application.

4) How quickly will I receive quotes after submitting a Get Quote / eligibility form?
Matched partners typically respond within hours during business hours, with full formal offers taking longer depending on documentation, valuations and underwriting.

5) What loan amounts can UK Business Loans help me access?
We match businesses to lenders and brokers offering amounts from around £10,000 up to multi‑million facilities, depending on the product and lender panel.

6) Can start-ups or businesses with imperfect credit get commercial finance?
Yes — many specialist lenders and brokers work with start‑ups and imperfect credit profiles, though expect higher margins, additional security or stricter covenants in many cases.

7) How do I fairly compare different business loan offers?
Ask for an itemised fees schedule and illustrative repayment plan, check whether quotes are interest‑only or capital & interest, confirm which fees are capitalised, and compare effective monthly cost (especially for short‑term bridging/development) rather than APR alone.

8) Is UK Business Loans a lender or regulated financial adviser?
We are an introducer that connects you with trusted UK lenders and brokers — we do not lend money or provide regulated financial advice.

9) What types of commercial finance can I find through UK Business Loans?
Our panel covers commercial mortgages, development finance, bridging loans, asset & equipment finance, invoice finance, unsecured loans/MCA, overdrafts, sustainability‑focused loans and other working capital solutions.

10) How can I reduce the overall cost of borrowing for my business?
Improve your financials and credit profile, reduce LTV or add security, negotiate arrangement/exit fees, consider longer terms or asset finance structures, and work with specialist lenders who understand your sector to secure better pricing.