How do I compare indicative terms and repayment profiles?

Three numbers matter when comparing UK SMB loan offers: total cost of credit (in pounds, not headline rate), monthly repayment amount, and any early redemption fee or compounding behaviour. Headline rates and factor rates are not directly comparable across products, so always reduce each offer to those three figures.

Comparing different rate structures. APR is straightforward and comparable: a 12.9% APR loan over 3 years carries fixed monthly repayments and a defined total cost. Per-month rates (used by iwoca and others) need conversion: 2% per month over 12 months is roughly 26.8% APR equivalent if you hold the full term, less if you repay early. Factor rates (used by merchant cash advance lenders) need conversion too: a 1.30 factor rate on a £50,000 advance repaid over 9 months is roughly 60% APR equivalent. Our effective APR converter handles all three.

Compare monthly servicing. A £100,000 facility at 9% APR over 5 years costs £2,076 per month. The same facility at 14% APR over 5 years costs £2,326 per month, a difference of £250 per month or £15,000 over the term. A £100,000 MCA at 1.25 factor over 9 months costs £13,889 per month, eight times more than the term loan but on a much shorter horizon. The right comparison is total cost over the time you will actually use the cash.

Then check redemption fees. Most UK term lenders charge 1 to 3% of the outstanding balance for early settlement, but some charge none. iwoca's flexi-loan structure has no redemption fee at all. Allica Bank typically charges 1 to 2% on the secured book. Always read the redemption clause before signing.

See our loan affordability calculator and DSCR calculator for the servicing maths.