Loan offer review checklist

Why the offer, not the rate, is what you sign

An interest rate is a marketing number; the offer document is the contract. Two facilities with the same rate can cost very differently once fees, term and early-settlement rules are in. Before you sign, read the whole offer and check it line by line against this list — fifteen minutes here can save a great deal later, and a reputable lender will happily answer every question you raise.

This checklist is built for UK limited-company directors reviewing a business finance offer. Pair it with the true cost of borrowing calculator so you are checking the maths as well as the wording.

1 — The total repayable and the cost of credit

Find the single most important figure: the total amount repayable over the life of the facility. Then confirm:

• The cost of credit — total repayable minus the amount borrowed.
• Whether the rate is fixed or variable, and if variable, what it tracks and how it can move.
• The representative APR versus the rate you have actually been offered — they can differ.

If the offer quotes only a monthly or weekly rate, annualise it before you compare. A facility advertised at a low periodic rate can carry a high effective annual cost once compounding and fees are counted.

2 — Every fee, named and totalled

Fees are where the real cost often hides. Read the schedule and list every charge:

Fee	Check
Arrangement / facility fee	Added to the loan or paid upfront?
Drawdown or transfer fee	Charged per drawdown on a facility?
Late / missed payment fee	How much, and after what grace period?
Early settlement / exit fee	See section 3 below
Annual / renewal fee	Recurring on revolving facilities?

Add the fees to the interest to get your true total. Business finance fees explained breaks down what each one means.

3 — Early settlement and flexibility

Your plans may change, so check what it costs to repay early. This is one of the most overlooked clauses and one of the most expensive to get wrong:

• Is there an early settlement fee or interest rebate, and how is it calculated?
• On a term loan, do you save the remaining interest by settling early, or is interest front-loaded so early repayment saves little?
• On a revolving facility, can you repay and redraw freely without penalty?

A facility you can clear early without penalty — as with Credicorp Flex, where you pay for what you use — is worth more than the rate alone suggests, because it lets you stop paying the moment you no longer need the money.

4–6 — Security, guarantee and the schedule

4. Security & personal guarantee. Check whether the offer requires a charge over company assets, a debenture, or a personal guarantee making you liable if the company cannot pay. This single clause can matter more than the rate. Credicorp lends to the limited company with no personal guarantee.

5. The repayment schedule. Confirm the first payment date, the frequency, the exact amount, and whether payments are level or change over time. Make sure they fall when the business generates cash.

6. The conditions and covenants. Read any ongoing obligations — financial covenants, reporting requirements, default triggers and what counts as a breach. Then run the affordability one last time with the affordability calculator. This is general guidance, not legal advice; if anything is unclear, ask the lender in writing or take professional advice before signing.