What does it cost to borrow £5,000?

Why £5,000 has no sticker price

At the small end of business lending, underwriting is usually statement-led: a lender reads your recent bank activity rather than commissioning a full accounts review, and prices from the day-to-day cash evidence it sees there. That makes decisions fast, but it also means two companies asking for the same £5,000 can be quoted very different rates. The bigger trap is fixed costs — a £250 arrangement fee is 5% of a £5,000 advance before a penny of interest accrues, a proportion that would barely register on a six-figure facility. Check what up-front fees to expect before comparing rates at all.

An illustrative £5,000 example

Purely as an illustration: £5,000 on a reducing balance at 12% a year over 12 months comes to roughly £444 a month — about £5,331 repaid in total, so around £331 of interest. Now add a £150 set-up fee: the true cost jumps to roughly £481, nearly half as much again on the interest bill from one line item. Your own quote will differ with your company's profile, but the arithmetic holds: on small, short borrowing, the fee stack moves the total more than a point or two of rate ever will.

Trimming the bill on a small loan

Take the shortest term you can comfortably service — small advances clear quickly, so interest has little time to build. Compare quotes on the all-in figure including every fee, and be careful with products quoted as a factor rate rather than an APR, which can make a dear deal look cheap. Model your own numbers on the true cost calculator, and if £5,000 is the right size for the job, get a Credicorp quote — it costs nothing to see your figure.