Will my repayments be the same every month?

2 min read

Fixed = levelSame every month

Variable = movesWith the base rate

Revenue-linked = flexesWith your sales

Check your typeKnow before you sign

When payments stay level

The classic business term loan is fixed-rate and amortising: the interest rate is set at outset and the payment is calculated to stay exactly the same every month until the loan clears. This is the structure most directors picture, and it makes budgeting simple — you know the number for the whole term. See how that level payment is calculated.

When payments change

Two common structures break the level pattern. On a variable-rate facility the payment moves when the base rate changes. On a revenue-linked or merchant-cash-advance product the repayment is a share of your takings, so it rises and falls with sales. Neither is wrong — but if you assumed a level payment and have one of these, the amount will vary, sometimes materially.

Knowing what you have

The agreement states whether your rate is fixed or variable and how repayments are collected. If certainty matters to your cash flow, a fixed-rate level-payment loan gives it. If you want payments that ease in quiet periods, a revenue-linked product does that at the cost of predictability. Match the structure to how much payment certainty your business needs.

Model a level fixed payment on the repayment calculator, and if rates could move, read what happens if rates rise. When you have chosen, apply.

Frequently asked questions

My payment changed and I'm on a fixed rate — why?

On a genuine fixed-rate loan the payment should not change mid-term unless the loan itself was altered — an overpayment, a term change, or a fee added. If none of those happened and the payment moved, query it with the lender immediately; it may be an error, or the product may be variable when you thought it fixed. Get the reason in writing.

Do revenue-linked repayments have a maximum?

They are usually capped as a percentage of takings rather than a fixed maximum pound figure, so the amount rises with sales but never exceeds the agreed share. That protects you in a busy month from an outsized fixed hit. The flip side is that a run of strong sales repays the facility faster, and a run of weak sales stretches it out.