Commercial Finance
A guide to the facilities, pricing and contractual terms used to arrange funding for UK companies and other business borrowers.
- Amortisation
In loan terminology, amortisation is the scheduled repayment of principal over time through instalments.
- Annual Percentage Rate
Annual Percentage Rate is an annualised measure of credit cost calculated using specified rules, intended to help compare borrowing where the measure applies.
- Arrangement Fee
An arrangement fee is a charge for setting up a finance facility, payable according to the terms of the offer.
- Base Rate
In UK finance, base rate commonly refers to the Bank of England’s Bank Rate, which influences interest rates across the economy.
- Drawdown
Drawdown is the release or use of funds under an approved finance facility, once the relevant conditions are met.
- Early Repayment Charge
An early repayment charge is a contractual cost that may apply when finance is repaid before the agreed date.
- Fixed Interest Rate
A fixed interest rate remains unchanged for the fixed period specified in the agreement, even if relevant market rates change.
- Interest Rate
An interest rate is the percentage used to calculate the charge for borrowing money over a stated period and on a stated balance.
- Interest-Only Loan
An interest-only loan requires interest payments during a stated period while leaving the capital to be repaid separately, commonly at the end.
- Loan Covenant
A loan covenant is a contractual promise or condition that a borrower must satisfy during a finance agreement.
- Security
Security in lending is a legal right over assets or other support that helps a lender recover money if contractual obligations are not met.
- Variable Interest Rate
A variable interest rate can change during an agreement under the mechanism specified in its terms.