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Commercial finance guide
Commercial finance costs and rates explained
A headline rate is only one part of a commercial finance decision. Compare the total cost, cash-flow shape, security and obligations before deciding.
NBS Finance is a broker and introducer, not a lender, and does not charge the client a separate broker fee. Finance providers determine their own rates, charges, fees, security and terms. Nothing on this page is a quote.
Direct answer
Commercial finance does not have one universal rate. A provider may consider the product, amount, term, business profile, asset or invoices, security, deposit and wider risk. The lowest monthly payment is not automatically the lowest total cost.
Ask for a written breakdown that lets you compare like with like.
Quick comparison
Six cost questions before you decide
Cash up front
What deposit, advance payment or initial fee is required?
Regular cost
What are the payments, interest, discount charge or service fee?
End cost
Is there a balloon, final rental, option-to-purchase or exit payment?
Total cost
What is the total amount payable if the agreement runs as planned?
Downside
What happens on early settlement, late payment, default or asset loss?
What may affect pricing?
| Factor | Why it may matter | Useful information |
|---|---|---|
| Business profile | Trading history, cash flow and existing commitments help a provider assess risk and affordability. | Accounts, bank activity and an accurate explanation of the requirement |
| Asset or invoices | Value, age, condition, customers and payment quality can affect the security supporting the facility. | Quotation, valuation context, aged debtor information or supporting contracts |
| Amount and term | Borrowing more or stretching payments over longer can change both regular payments and total cost. | A realistic amount, useful-life context and affordable payment range |
| Deposit or support | A contribution, guarantee or other security can change the provider's risk, but also changes what the business puts at risk. | Source of deposit and a clear explanation of any security or guarantee |
| Structure | Hire purchase, lease, refinance and invoice facilities charge and repay in different ways. | Compare ownership, fees, tax treatment and end-of-term obligations with professional advice where needed |
A headline rate is not the whole answer
Interest or discount charge
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Facility and arrangement fees
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End or exit costs
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Total commercial impact
Depending on the product, other factors can include a deposit, provider arrangement or documentation fees, service fees, maintenance, insurance, valuation, legal costs, commission paid by a provider or intermediary and the consequences of settling early.
NBS Finance does not charge the client a separate broker fee. Ask how NBS is remunerated and whether provider or intermediary commission applies to the proposed introduction before you decide.
How to compare like with like
- Use the same amount and term. A longer term can reduce regular payments while increasing the total paid.
- Include every compulsory fee. NBS does not charge the client a separate broker fee; still compare provider, legal, valuation, documentation and other costs that apply to the proposed agreement.
- Check the end position. Confirm who owns the asset, whether a final payment applies and what happens to any reserve or retained balance.
- Read the security and guarantee terms. Understand what could be enforced if the business cannot pay.
- Test a difficult month. Consider whether payments remain manageable if revenue falls, customers pay late or costs rise.
Cost language changes by route
Business loans
Compare the full repayment
Check the amount received, interest or fixed charge, payment frequency, total repayable, arrangement fees, security, guarantees and early-settlement terms.
Asset finance
Look beyond the instalment
Check deposit, term, interest or rental, documentation fees, final payments, ownership, maintenance and early-settlement terms.
Invoice finance
Understand facility charges
Check the advance, discount charge, service fee, minimum charges, concentration limits, bad-debt protection and exit terms.
Asset refinance
Compare cash released with obligations
Check valuation, settlement of existing finance, fees, new term, total cost and what happens to the asset if payments are missed.
Your next step
Ask for the written breakdown
Keep the amount, term and assumptions consistent so different proposals can be compared fairly.
Independent context
The British Business Bank publishes general guidance on business loans, asset finance and invoice finance, including common structures, benefits and risks. Independent guidance cannot replace the terms of a specific agreement.
Describe the requirement before comparing terms
Start with the amount, purpose, timing and business context. Any provider proposal should then be assessed on its full written terms.