What interest rates are available for business refinance in the UK?
Quick answer
Interest rates for business refinance in the UK vary widely depending on the product, the lender, and the strength of the business’s finances. Typical headline ranges in October 2025 run from low single-digits for well-secured commercial mortgages to double-figure APRs for unsecured or specialist products, with high-cost alternatives and MCA-style funding often carrying much higher effective rates. Use multiple quotes and a qualified broker or introducer to identify the most appropriate rate for your situation.
Typical interest-rate ranges you can expect
Secured commercial mortgages used for business refinance often carry rates from around 3% to 8% for strong borrowers with substantial security. Rates depend on lender type, loan-to-value (LTV) and market conditions, and some specialist or interest‑only products may sit above this range.
Asset finance and hire-purchase deals typically charge between 4% and 12% depending on the asset, term and deposit. Manufacturers and brokers sometimes arrange lower rates for new equipment with vendor support.
Unsecured business loans and overdrafts usually range from roughly 6% to 30%, with better rates reserved for established SMEs with clean credit histories. Shorter-term facilities tend to be more expensive in percentage terms than longer-term loans.
Invoice finance and factoring are priced differently: providers charge factoring fees, discount rates or service fees that typically range from 0.5% to 3% of invoice value per month, plus service fees and interest on advanced balances. These fees are best compared as effective annual costs rather than headline interest alone.
Merchant cash advances (MCAs) and other revenue‑based facilities do not quote an annual interest rate in the conventional sense but can equate to very high APRs. Businesses should compare the total cost of repayment over the term before agreeing to these options.
Key factors that determine the rate you’ll be offered
Credit profile is fundamental: lender checks include business credit history, director credit scores, time trading, and recent financial performance. Strong credit typically secures the lower end of published rate ranges.
Security and collateral reduce lender risk and usually unlock better rates. Property or high-value equipment provided as security often attracts lower pricing than unsecured lending.
Loan‑to‑value (LTV) and the size of the facility are critical. Lower LTV and larger facilities can reduce margin because the lender’s risk per pound is smaller and administrative costs are proportionally lower.
Sector and cash‑flow profile matter: lenders price for sector risk and payment volatility. Asset-light or high-risk sectors may pay a premium, while stable, predictable sectors often access cheaper finance.
Term, repayment schedule and covenant complexity influence pricing. Short-term, flexible borrowing often costs more than longer-term fixed-rate refinance with defined amortisation.
How different refinance products compare (with typical rates)
Commercial mortgage refinance: ideal for property-backed consolidation or to release equity, with typical rates from about 3% to 8% for eligible businesses. Fixed and variable options exist; fixed rates provide certainty but can include arrangement or early‑repayment charges.
Asset refinance (asset-backed loans / sale & leaseback): often priced between 4% and 12% depending on asset type, age and term. Sale & leaseback can free capital but may alter balance sheet treatment and involve lease costs.
Invoice finance (factoring/invoice discounting): fees are usually 0.5%–3% per month plus interest on drawn advances, so annualised costs vary substantially by client risk and funding level. Invoice finance is often faster than traditional bank lending.
Unsecured business loans and business lines of credit: rates typically fall in the 6%–30% range, influenced by trading history, turnover and security. Short-term cashflow loans tend to be at the higher end of this band.
Merchant cash advances and revenue-based funding: not normally expressed as simple interest rates, but can carry very high equivalent APRs. These products suit businesses with uneven cashflow that need rapid access to capital, but they should be used with caution.
Additional costs to include when comparing rates
Arrangement fees, valuation fees, underwriting fees and legal costs can add materially to the effective cost of refinance. Always ask lenders for a full fees schedule and for APR or total cost of borrowing figures where available.
How to shop for the best refinance rate: practical steps
Get a clear picture of total costs, not just headline rates. Request APRs, breakdowns of fees, and sample repayment schedules so you can compare like for like across providers.
Obtain multiple offers: parallel quotes from specialist lenders, challenger banks and broker panels improve your chances of a competitive rate. Use an introducer or broker who specialises in refinance to broaden your market reach quickly.
Check the small-print on early repayment charges, collars, and margin ratchets. Some low fixed rates include significant exit penalties that can negate savings if you refinance again early.
Confirm security requirements and whether personal guarantees are required. Personal guarantees and director security materially affect risk and should be weighed in your decision.
If you want a fast eligibility check, consider using Best Business Loans to submit a Quick Quote and receive matched lender or broker introductions for refinance. Our platform helps you compare likely rates and providers quickly and for free: https://bestbusinessloans.ai/loan/refinance/.
How to reduce the rate you’ll pay and next steps
Strengthen your application by improving cashflow documentation, presenting up‑to‑date management accounts, and preparing a clear business plan. Lenders respond to clarity and evidence of stable repayments.
Lower LTV by contributing a larger deposit or releasing assets prior to refinance. A reduced LTV is one of the quickest ways to secure a meaningful rate improvement.
Consider extending the term to reduce monthly repayment pressure and potentially qualify for a lower margin, while being mindful of the total cost over the loan life. A longer term may be more affordable month‑to‑month but costlier overall.
Negotiate fees and ask for fee waivers. Arrangement and valuation fees are often negotiable, especially when you demonstrate competitive offers from alternative lenders.
Use an independent, experienced broker or an introducer to access specialist lenders that do not market directly to the public. Brokers can often secure preferential rates and structure terms that larger banks will not offer.
Key takeaways
Business refinance rates in the UK vary from low single digits for well-secured commercial mortgages up to double figures for unsecured or specialist products, and much higher effective costs for revenue‑based funding. Compare APR and total costs, not just headline rates. Strengthen your paperwork, reduce LTV and use professional matching or broking to find the most competitive offers. Submit a Quick Quote if you want a confidential eligibility check tailored to your circumstances.
Regulatory and compliance note
Best Business Loans is an independent introducer and does not provide lending itself. We help connect UK businesses with lenders and brokers for refinance and other commercial funding. We do not recommend any specific product and do not provide regulated advice. Always obtain, and rely on, terms directly from the lender or an authorised adviser and check how any product aligns with your company’s circumstances.
Next step — get an eligibility check
If you are considering refinancing, start with a no‑obligation Quick Quote to receive matched introductions and indicative rates quickly. Our process is free and confidential, and it helps you understand the realistic rates available for your business. Complete a Quick Quote to get matched with lenders or brokers who specialise in business refinance.