Small Business Borrowing
Danske Bank Reference Rate has decreased from 5.00% to 4.75% effective from 8 November 2024.
We are always looking to improve the information available to small business customers and specifically in this instance those considering borrowing to develop their business. The information contained in this section is primarily aimed at those customers interested in borrowing up to £25,000 on an unsecured basis either through a loan or an overdraft.
The following sections set out additional information to help inform your potential borrowing requirements.
- Section 1 sets out the Annual Percentage Rates (APR) for amounts up to £25k and terms from 1 to 5 years
- Section 2 explains what factors are used in making the APR calculation.
- Section 3 displays the effective annual rate of borrowing using an unsecured overdraft.
- Section 4 includes the table showing the cost of borrowing by an unsecured loan for various amounts over terms of 1 to 5 years.
- Section 5 provides a copy of the terms and conditions applicable for borrowing by means of a variable rate loan. You must be 18 or over. Lending criteria, terms and conditions apply.
Section 1:
This section displays the APR associated with borrowing varying amounts over different periods of time. These examples are subject to change if the underlying reference rate Danske Bank Reference Rate (DBRR) changes (this is currently 4.75%).
| Amount | Term 1 Year | Term 2 Year | Term 3 Year | Term 4 Year | Term 5 Year |
|---|---|---|---|---|---|
| £5,000 | 17.9% | 15.3% | 14.4% | 13.9% | 13.7% |
| £10,000 | 15.1% | 13.8% | 13.4% | 13.2% | 13.0% |
| £15,000 | 14.2% | 13.3% | 13.1% | 12.9% | 12.8% |
| £20,000 | 13.7% | 13.1% | 12.9% | 12.8% | 12.7% |
| £25,000 | 13.5% | 13.0% | 12.8% | 12.7% | 12.6% |
Section 2:
Annual Percentage Rate: APR is calculated on the basis that all offers for term lending will be priced at the standard published margin of 7%.
The APR includes the £125 arrangement fee. APR is affected by the amount, term, rate and arrangement fee of any loan and is designed to reflect the total cost of borrowing. Further information on APR can be found in our glossary.
Section 3:
Effective Annual Rate (EAR) for Business Current Account (BCA) overdrafts:
EAR takes into consideration the compounding effect of debit interest on the overdraft. It differs from an APR as it does not include any additional costs such as an arrangement fee.
EAR for BCAs
11.75% (BoE + 7%) = EAR of 12.28%
Costs associated with BCA overdraft approval, usage and renewal:
Overdraft Arrangement Fee £125
If you were overdrawn for 5 days by £3,000 the interest cost would be £4.83
Annual Renewal Fee 1.00% (minimum fee £50): fee for a £3,000 overdraft would be £50
Arranged overdrafts are repayable on demand. This means you will have to repay the overdraft in full when asked to do so. You may need to provide security for overdrafts.
Please see our Fees and service charges explained - Business Accounts leaflet for full details.
Section 4:
The table below sets out the indicative cost of borrowing varying amounts up to £25,000 over terms of 1 to 5 years. Whether we provide credit depends on your circumstances, and you must be 18 or over. Lending terms and conditions apply.
Loan repayments are indicative only and are based on a variable rate of 11.75% (which is the Danske Bank Reference Rate plus a margin of 7%). We also assume no change to the reference rate during the loan period. The calculation also includes an arrangement fee of £125 being applied at the outset of the loan.
| Amount | Term 1 Year Monthly Cost | Total Capital & Interest | Total Cost of Credit |
|---|---|---|---|
| £5,000 | £443.67 | £5,323.99 | £5,448.99 |
| £10,000 | £887.34 | £10,648.00 | £10,773.00 |
| £15,000 | £1,331.01 | £15,972.00 | £16,097.00 |
| £20,000 | £1,774.67 | £21,296.00 | £21,421.00 |
| £25,000 | £2,218.34 | £26,619.99 | £26,744.99 |
| Amount | Term 2 Year Monthly Cost | Total Capital & Interest | Total Cost of Credit |
|---|---|---|---|
| £5,000 | £234.78 | £5,634.68 | £5,759.68 |
| £10,000 | £469.56 | £11,269.36 | £11,394.36 |
| £15,000 | £704.34 | £16,904.05 | £17,029.05 |
| £20,000 | £939.12 | £22,538.73 | £22,663.73 |
| £25,000 | £1,173.90 | £28,173.44 | £28,298.44 |
| Amount | Term 3 Year Monthly Cost | Total Capital & Interest | Total Cost of Credit |
|---|---|---|---|
| £5,000 | £165.47 | £5,956.76 | £6,081.76 |
| £10,000 | £330.94 | £11,913.51 | £12,038.51 |
| £15,000 | £496.40 | £17,870.39 | £17,995.39 |
| £20,000 | £661.87 | £23,827.15 | £23,952.15 |
| £25,000 | £827.34 | £29,783.91 | £29,908.91 |
| Amount | Term 4 Year Monthly Cost | Total Capital & Interest | Total Cost of Credit |
|---|---|---|---|
| £5,000 | £131.06 | £6,290.70 | £6,415.70 |
| £10,000 | £262.12 | £12,581.39 | £12,706.39 |
| £15,000 | £393.18 | £18,872.07 | £18,997.07 |
| £20,000 | £524.23 | £25,162.87 | £25,287.87 |
| £25,000 | £655.29 | £31,453.55 | £31,578.55 |
| Amount | Term 5 Year Monthly Cost | Total Capital & Interest | Total Cost of Credit |
|---|---|---|---|
| £5,000 | £110.60 | £6,635.73 | £6,760.73 |
| £10,000 | £221.20 | £13,271.32 | £13,396.32 |
| £15,000 | £331.79 | £19,907.19 | £20,032.19 |
| £20,000 | £442.39 | £26,542.85 | £26,667.85 |
| £25,000 | £552.98 | £33,178.80 | £33,303.80 |
