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How to compare business loans
Two loans with the same rate can cost very different amounts. This is how to put offers side by side so you are comparing the thing that matters: what you will actually pay.
Work out your repayments
Put in an amount, a rate and a term and see the monthly repayment, the total repayable and the interest, month by month. Illustrative, free, and nothing is collected.
Step 1: compare total repayable, not the monthly payment
A longer term lowers the monthly payment and raises the total cost. Lenders know the monthly figure is what most people look at. Ask each lender for the total amount repayable over the full term, including fees, and rank on that.
Step 2: understand which rate you are being shown
- Representative APR: the rate at least 51% of borrowers accepted through that advert receive, including compulsory fees. Useful for comparing adverts, not a promise.
- “Rates from”: the lowest rate the lender offers, available only to the strongest applicants.
- Flat rate: interest worked out on the original amount for the whole term, common in asset finance. A flat rate looks much lower than the equivalent APR, because you pay interest on money you have already repaid.
- Monthly rate: used in bridging. Multiply by twelve for a rough annual figure, before fees.
- Factor rate: used in merchant cash advances. A fixed multiple of the advance, not an interest rate at all.
Step 3: list every fee
Arrangement or completion fees, early settlement charges, broker fees, valuation and legal fees on secured loans, and any fee for missed payments. A fee added to the loan accrues interest.
Step 4: compare security and guarantees
A cheaper loan with a charge over your home is not cheaper if the risk to you is greater. Compare what each lender takes as security and what a personal guarantee covers.
Step 5: compare flexibility
Can you repay early without a charge? Draw further funds? Take a repayment holiday? For a growing business, flexibility can be worth more than a fraction of a percent.
Illustrative repayments at each published rate
The table below takes the lenders in our comparison that publish a single representative or fixed rate and works out what the same loan would cost at that rate. It is arithmetic on the published figure, so it shows how rates translate into pounds. It is not what you would be offered: your rate is set by the lender on your application. Lenders that price every loan individually are not in it, because there is no published figure to calculate from.
Borrowing £10,000 over 5 years
| Lender | Published rate | Monthly | Total repayable | Interest | Rate source |
|---|---|---|---|---|---|
 Start Up Loans (British Business Bank)fixed rate, the same for every borrower | 7.5% | £199.21 | £11,952.73 | £1,952.73 | source checked 2026-10-13 |
 Metro Bank“typically” APR as published | 9.6% | £208.56 | £12,513.87 | £2,513.87 | source checked 2026-10-13 |
 Barclaysrepresentative APR for this amount | 11.2% | £215.75 | £12,944.88 | £2,944.88 | source checked 2026-10-13 |
 Lloyds Bankrepresentative APR | 11.2% | £215.75 | £12,944.88 | £2,944.88 | source checked 2026-10-13 |
 Santander UKrepresentative APR | 11.2% | £215.75 | £12,944.88 | £2,944.88 | source checked 2026-10-13 |
 HSBC UKrepresentative APR for this amount | 11.3% | £216.20 | £12,971.91 | £2,971.91 | source checked 2026-10-13 |
Borrowing £25,000 over 5 years
| Lender | Published rate | Monthly | Total repayable | Interest | Rate source |
|---|---|---|---|---|---|
| Start Up Loans (British Business Bank)fixed rate, the same for every borrower | 7.5% | £498.03 | £29,881.81 | £4,881.81 | source checked 2026-10-13 |
| Barclaysrepresentative APR for this amount | 8.5% | £509.14 | £30,548.14 | £5,548.14 | source checked 2026-10-13 |
| HSBC UKrepresentative APR for this amount | 8.6% | £510.25 | £30,614.95 | £5,614.95 | source checked 2026-10-13 |
| Metro Bank“typically” APR as published | 9.6% | £521.41 | £31,284.66 | £6,284.66 | source checked 2026-10-13 |
| Lloyds Bankrepresentative APR | 11.2% | £539.37 | £32,362.19 | £7,362.19 | source checked 2026-10-13 |
| Santander UKrepresentative APR | 11.2% | £539.37 | £32,362.19 | £7,362.19 | source checked 2026-10-13 |
Arithmetic on each lender’s published rate for that amount, assuming no fees (none of these lenders publishes a compulsory arrangement fee). APR is converted to a monthly rate the way the APR definition requires, which matches the lenders’ own representative examples to within pennies. Not an offer: a representative APR is what at least 51% of accepted applicants get, and your rate may be higher.
Want a specialist to search the market for you?
Tell us about your company and what you need. With your consent, a specialist business finance broker contacts you and does the searching. Free to use; we may be paid by the broker for the introduction.
Frequently asked questions
What is the best way to compare business loans?
Compare the total amount repayable over the full term, including all fees, on real offers for your business, then weigh security and flexibility. Headline rates are a starting point only.
Is a lower APR always cheaper?
Not always. A loan with a lower APR over a longer term can cost more in total than a higher APR over a shorter one, and APR does not capture every optional fee.
Why do lenders show different kinds of rate?
Different products are priced differently: term loans by APR, asset finance often by flat rate, bridging by monthly rate, and merchant cash advances by factor rate. Convert each to a total cost to compare them.