What is APR (Annual Percentage Rate)?
The total cost of borrowing money over a year, including the standard interest rate plus any mandatory fees or charges.
The Details
The Annual Percentage Rate represents the true cost of a business loan. Unlike the "flat interest rate," which only details the percentage charged on the principal amount, the APR encompasses arrangement fees, valuation fees, and other mandatory administrative charges spread across the year. By law, lenders must display the APR to provide borrowers with a transparent, standardised metric for comparing different financial products.
Commercial Relevance
Evaluating business loans solely by their advertised flat rate can be misleading. Always use the APR to compare invoice finance, asset finance, or unsecured business loans to assess the true impact on your working capital.