Business Loan Calculator UK
UK business lending has unique features. Calculate loan costs with British rates, terms, and tax implications for informed borrowing decisions.
How the Business Loan Calculator UK works
Enter loan amount in pounds, UK interest rates, arrangement fees, and terms. Calculate monthly payments, total costs, APR, and comparison to UK market rates with tax considerations.
UK business loans have specific structures and regulations. This calculator handles British lending nuances, ensuring accurate cost analysis for UK businesses.
How it works
Tutorial
UK business lending involves specific regulations, tax treatments, and rate structures that differ from other markets. Understanding total loan costs including arrangement fees, early repayment charges, and UK tax relief helps secure optimal financing.
You have two options: use the calculator above for UK-specific loan analysis, or follow this guide to manually calculate British business loan costs.
The Formula
| Component | Formula |
|---|---|
| Monthly Payment | P × [r(1+r)^n] ÷ [(1+r)^n – 1] |
| Total Interest | (Monthly Payment × Months) – Principal |
| APR | Effective Annual Rate Including All Fees |
Step-by-Step Calculation
Here’s a UK business loan analysis with all costs.
Step 1: Calculate Monthly Payment
Determine regular payment amount:
| Loan Details | Value |
|---|---|
| Loan Amount | £50,000 |
| Interest Rate | 7.5% per annum |
| Term | 5 years (60 months) |
| Monthly Rate | 0.625% |
| Monthly Payment | £1,001 |
Calculation: Using loan formula = £1,001/month
Step 2: Calculate Total Loan Cost
Add up all costs over the loan term:
| Cost Component | Amount |
|---|---|
| Total Payments (60 × £1,001) | £60,060 |
| Less: Principal | -£50,000 |
| Arrangement Fee (2%) | £1,000 |
| Valuation Fee | £500 |
| Legal Fees | £750 |
| Total Interest & Fees | £12,310 |
Calculation: £60,060 – £50,000 + £1,000 + £500 + £750 = £12,310
Step 3: Calculate True APR
Determine effective annual percentage rate:
| Step | Calculation | Result |
|---|---|---|
| Net Loan Amount | £50,000 – £2,250 fees | £47,750 |
| Total Repayment | 60 × £1,001 | £60,060 |
| Effective APR | Including all fees | 8.9% |
Final Answer: True cost is 8.9% APR vs. stated 7.5%
What This Means
While the base rate is 7.5%, arrangement and other fees increase your effective cost to 8.9%. UK tax relief on business loan interest reduces the after-tax cost by approximately 19-25% depending on your corporation tax rate.
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