Pricing
How to read a business finance offer: APR, total repayable and personal guarantees
Rook Bristol Editorial · Updated · 6 min read
The short answer
The most useful figure in a business finance offer is the total amount repayable: everything you'll pay back over the term. Subtract the amount you receive to get the cost of finance, then check the repayment schedule, any fees, and whether a personal guarantee or security is required. Headline rates alone can mislead, because products express cost differently.
What do the terms in an offer mean?
- Amount of credit: what lands in your account, after any arrangement fee is deducted.
- Total amount repayable: every pound you'll repay over the life of the facility.
- Cost of finance: total amount repayable minus the amount of credit.
- APR: the annual percentage rate, which includes interest and most fees and expresses them per year.
- Repayment multiple or fixed fee: a single charge added to the amount borrowed, common in revenue-based finance.
- Repayment schedule: weekly, monthly or a share of card takings. It shapes cash flow as much as cost does.
Which number should I compare?
Start with the cost of finance in pounds, then check that the repayment schedule fits your income. To compare a fixed-fee offer with a loan, use our repayment multiple to APR converter.
What is a personal guarantee?
A personal guarantee is a promise by a director or owner to repay the debt personally if the business can't. It's common with unsecured business lending in the UK. Check whether the guarantee is limited to a set amount or covers the whole debt, and whether it can be released.
A personal guarantee is a serious commitment. Always read the terms in full and take independent legal advice before signing.
What else should I check before signing?
- Early repayment: can you settle early, and is there a charge or a saving?
- Security: is any charge or debenture being taken over business assets?
- Fees: arrangement, broker, late payment and any other charges.
- Covenants: any conditions you must keep to during the term.
Every Rook Bristol offer sets out the total amount repayable, the schedule and any fees before you sign.