What does “indicative terms” mean?

Indicative terms are non-binding estimates of pricing and structure based on initial information. They are subject to underwriting, credit checks, and documentation, and can change before a Decision in Principle or formal offer.

What is a repayment profile?

A repayment profile sets out how and when you repay capital and interest. Common profiles include amortising (capital + interest each period), interest-only with a final bullet, seasonal schedules, and balloon structures for assets.

Is APR the best way to compare business finance?

APR helps for term loans, especially when fees are included. For products like invoice finance, asset-based lines, or short-term advances, use Total Cost of Credit and scenario utilisation to make like-for-like comparisons.

How do I compare fixed vs variable rates?

Model payments at the current base rate, then add 1.5% and 3% to see affordability. Check for collars, caps, repricing frequency, and any margin step-ups to understand your potential payment range.

What documents should I ask providers for?

Request an indicative term sheet, a full fee schedule, an amortisation or repayment illustration, early-settlement calculations, and confirmation of security or guarantees. These enable apples-to-apples comparisons.

Will early repayment reduce my total cost?

Often, yes, but it depends on the contract. Some lenders charge a flat percentage, some apply a minimum interest period, and others use rule-of-78 rebates. Always get a written settlement quote before repaying early.

How do I compare indicative terms and repayment profiles from different providers?

The quick answer and the key concepts

The fastest way to compare indicative terms and repayment profiles is to standardise every quote, line up the same metrics, and model the cash flow impact over time. Focus on total cost of finance, monthly payment shape, fees, early settlement, security, and flexibility. Then test best, base, and worst‑case scenarios before you decide.

Indicative terms are non‑binding outlines of what a lender or broker expects they could offer, subject to underwriting. They are useful for shortlisting but not guarantees. Always treat them as estimates until a Decision in Principle (DIP) or formal offer is issued.

A repayment profile describes how and when you repay, including frequency, amount, and how interest and fees are applied. Amortising, interest‑only, seasonal, balloon, fixed, and variable profiles can all change your monthly cash flow and your total amount payable.

What you should compare every time

Ask for the loan amount, term, interest basis, fees, repayment schedule, early settlement terms, security, and covenants in one place. Convert flat rates to APR where possible to see the like‑for‑like cost. If APR is not suitable (for example, invoice finance), use Total Cost of Credit and representative utilisation instead.

Key metrics to line up

Amount advanced vs. amount requested (after any holdbacks).
Term and repayment frequency (monthly, weekly, seasonal).
Interest basis (fixed APR, variable base + margin, flat rate).
Fees (arrangement, documentation, broker, asset valuation, exit).
Security (PGs, debentures, asset charges) and guarantees.
Early repayment costs and rebate method.
Total repayable under base, early‑settle, and overrun scenarios.

Start by building a simple comparison table using these headings. If anything is missing or unclear, ask for clarification before you proceed. Clarity now prevents costly surprises later.

Updated: October 2025 — guidance reflects common UK commercial finance practices and may change as market conditions evolve.

A consistent framework to compare offers

Step 1: Normalise terminology and numbers. Convert headline rates into annualised costs, list all fees, and calculate the net advance. Use the same repayment frequency for all comparisons.

Step 2: Model three scenarios for each provider: repay to term, settle early, and extend or overrun. This shows you the true spread of potential costs and cash flow.

Step 3: Stress‑test variable rates. Apply a +1.5% and +3.0% interest shock to see affordability. If the facility is linked to the Bank of England base rate, map those rises into your payment schedule.

Illustrative comparison (indicative only)

Item	Provider A	Provider B	Provider C
Amount requested	£200,000	£200,000	£200,000
Net advance (after fees)	£196,000	£198,500	£200,000
Term and profile	48 months, amortising	36 months, amortising	24 months, interest‑only + 10% balloon
Rate	Fixed 10.9% APR	Base + 5.0% (variable)	Flat 7.5% p.a.
Fees	2% arrangement	1% arrangement + £495 doc	3% arrangement
Early settlement	3% of outstanding	90 days’ interest	Rule of 78
Total repayable (to term)	£248,900	£238,700 (at current base)	£234,000 + £20,000 balloon

These figures are illustrative only and for demonstration. Your eligible terms will differ by provider, sector, security, and business performance. Always request a written breakdown that matches your use‑case.

Checklist for apples‑to‑apples comparisons

Confirm net advance and cash you actually receive.
Annualise costs and include all fees and exit charges.
Standardise the repayment calendar for side‑by‑side review.
Run early‑settle and rate‑rise scenarios for every option.
Document any assumptions you had to make due to missing data.

If you need a head start, you can submit a Quick Quote and request providers to present terms using a template like the table above. It keeps discussions clear and fair for all sides. [Get Your Free Quick Quote Now]

Understanding repayment profiles and cash‑flow impact

Amortising repayments mean you pay both interest and principal each period. They reduce your outstanding balance steadily and often suit stable cash flows. Interest‑only profiles lower near‑term payments but create a lump sum at the end.

Balloon payments are common in vehicle and asset finance. They reduce monthly outgoings but require planning for the final balloon or a refinance path. Seasonal or flexible profiles align repayments to your trading cycles.

How different profiles affect affordability

Amortising fixed rate: predictable budgeting, lower total interest when repaid to term.
Variable amortising: payments can rise or fall with base rate; stress‑test.
Interest‑only: best for short projects or where a defined exit exists; higher total cost if prolonged.
Balloon: preserves cash now, but you must plan for settlement or asset disposal later.
Seasonal: can improve resilience for cyclical sectors such as agriculture or hospitality.

Ask providers to supply an amortisation schedule or repayment illustration. Review month‑by‑month cash flows and the declining interest component over time. Check whether fees are added upfront, capitalised, or deducted from the advance.

Modelling tips for UK SMEs

Build a simple 24‑ to 60‑month cash‑flow model with rows for income, operating costs, and debt service. Add scenarios where revenue drops 10% and where interest increases by 2%. Confirm your minimum cash headroom stays positive.

Factor in VAT timings and corporation tax to avoid short‑term squeezes. If the facility is for equipment, consider the asset’s useful life and residual value. The repayment profile should not outlast the asset’s productive life without good reason.

Sector nuances matter. For example, food producers and hospitality operators often prefer seasonal repayments to match trading peaks, and you can explore tailored options on our page for food industry loans and finance. Matching the profile to reality is as important as the headline rate.

Fees, clauses, and risks that change the real cost

Fees can materially change the effective cost. Common charges include arrangement, documentation, valuation, broker, annual review, and exit fees. Ask how each fee is charged and whether it’s refundable if you do not draw down.

Early settlement terms vary widely. Some lenders use simple percentage fees on the outstanding balance, others use “rule of 78” or require a minimum interest period, while invoice finance may have notice periods.

Clauses to read carefully

Variable rate mechanics: base rate definition, repricing frequency, collars, and caps.
Default interest and fees: what applies after a missed payment or covenant breach.
Security: personal guarantees, debentures, asset‑specific charges, cross‑collateralisation.
Covenants: information undertakings, leverage limits, and cash sweep provisions.
Non‑utilisation fees: for lines and revolving facilities you don’t fully draw.

Government‑backed schemes such as the British Business Bank’s Growth Guarantee Scheme can improve access, but the lender sets pricing and terms. Always check eligibility, fees, and your responsibilities. Support from such schemes does not remove your obligation to repay.

How to quantify the true cost

Calculate Total Cost of Credit (TCC): interest plus all fees and charges over the life of the facility. Then calculate the effective cost per £1,000 of net cash received. This avoids being misled by fees deducted from the advance.

Compare flexibility value. A slightly higher rate with sensible early‑settlement terms can be cheaper if you plan to repay early. Conversely, the lowest headline rate can be costlier if exit penalties are steep.

Document all assumptions used in your comparison. If any provider cannot supply details, note the uncertainty and treat that risk appropriately. Transparency is part of a fair, clear, and not misleading decision process.

Make a confident choice and next steps

Use a short decision checklist before you proceed. Confirm you know the net advance, monthly payments under base and stress conditions, all fees, early‑settlement costs, and security. Check that the repayment profile matches your cash‑flow reality and asset life.

Decision checklist

Is the total cost acceptable in base and stressed scenarios?
Can you meet repayments in your quietest months?
What happens if you repay six or twelve months early?
What security and guarantees are you comfortable providing?
Is the facility easy to manage and administer day‑to‑day?

If you want offers presented consistently, ask for a Decision in Principle and a full fee schedule for the same loan amount and term. Request amortisation schedules and a written explanation of settlement calculations. Ensure all quotes are clearly labelled as indicative until credit is approved.

Important information and fair‑clear‑not‑misleading notice

Best Business Loans is an independent introducer. We do not provide credit or make lending decisions.
Information on this page is for general guidance only and not financial advice. Eligibility and rates depend on your circumstances and provider criteria.
Indicative terms are non‑binding and subject to underwriting, credit checks, and documentation.
Early repayment may incur fees and reduce interest; ask for a written settlement illustration.
We support established UK businesses and do not arrange consumer credit for individuals.

Ready to compare options side‑by‑side with less friction? Submit a Quick Quote and ask to see indicative terms using a common template covering rate, fees, net advance, schedule, and settlement rules. [Start Your Quick Quote] — fast, secure, and no obligation.

If you prefer, request an Eligibility Check to understand which providers are active in your sector and likely to engage. We’ll connect you with suitable lenders or brokers, then you decide what’s best for your business. That’s smart finance, powered by AI and backed by human expertise.