Settling a Business Loan before the end of its term stops future interest from accruing, which reduces the total interest component of your loan. However, an Early Repayment Charge (ERC) may apply, particularly within a defined window after drawdown. Whether early settlement saves money overall depends on how far through the term you are and the size of any ERC relative to the remaining interest.
How the ERC works
The ERC is designed to compensate Creditcorp for interest that would otherwise have been paid over the remainder of the term. It is calculated on the outstanding balance at the point of settlement and is disclosed in your credit agreement. Settling very early — shortly after drawdown — typically results in a larger ERC because more interest remains unpaid. Settling later in the term may mean the ERC is small or has expired entirely, in which case early settlement is straightforwardly cheaper.
How to calculate whether it is worth it
Ask your relationship manager for an early settlement figure. This will show the outstanding principal, any ERC, and any accrued but unpaid interest, giving you a single total payable today. Compare that figure to the sum of all remaining scheduled repayments. If the settlement figure is lower, early repayment saves money. If it is higher (which can happen when the ERC is large), it may be worth waiting until the ERC reduces or expires.
Does early repayment apply to Flex and Slice?
Creditcorp Flex has no fixed term and no ERC — you can repay your drawn balance at any time without penalty; interest simply stops accruing. Creditcorp Slice instalments follow a four-week schedule; the 6% fee is charged on the total bill at the outset and is not refundable for early payment.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: What fees does a Business Loan carry?, Does a longer loan term cost more overall?, Comparing total cost across Creditcorp products