The cost of borrowing for your company is not a fixed number — it is set by the lender based on a combination of risk, product type, and term length. Understanding how pricing works helps you compare offers accurately.
Risk-based pricing
Lenders assign a risk grade to each application based on factors such as trading history, cash flow, sector, and the size of the facility relative to revenue. A company with a long, clean track record and strong cash flow will typically be offered a lower rate than a younger company with patchy income. This is not arbitrary — the lender is pricing to cover expected losses across its entire book of borrowers.
Product structure affects the cost
Different products carry costs in different ways. A Business Loan charges interest over a fixed term — the total cost of borrowing is known from day one. A revolving facility such as Creditcorp Flex charges only on what you draw and for how long you hold it, so the effective cost depends on how you use it. Creditcorp Slice uses a flat fee of 6% rather than an interest rate at all, which makes it straightforward to compare with a trade discount or early-payment offer from your supplier.
What the rate does and does not include
Always check whether arrangement fees, draw-down fees, or early repayment charges are included in the headline rate or quoted separately. A lower headline rate with a large arrangement fee can cost more overall than a slightly higher rate with no upfront charge. For short terms in particular, fees can represent a significant proportion of total cost.
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: How business lending affordability is assessed, How risk is assessed in business lending.