APR stands for annual percentage rate. It expresses the total yearly cost of borrowing as a single percentage figure, bringing together the interest rate and any compulsory charges that form part of the credit agreement. Because it rolls these costs into one number, APR lets a borrower compare two facilities on a like-for-like basis rather than weighing an interest rate and a fee separately. This single figure is sometimes called the total charge for credit, or the cost of credit.
What is APR in the UK and how is it worked out?
In the UK, APR is calculated using a standard method set out in regulations. The calculation takes the amount borrowed, the interest charged, any mandatory fees, and the timing of every payment, then turns the whole arrangement into one annualised rate. Two facilities can carry the same headline interest rate but a different APR. This happens when one charges an arrangement fee and the other does not, or when repayments fall on a different schedule.
Representative APR
A "representative APR" is the rate that at least 51% of accepted borrowers are expected to receive or better. The rate offered to an individual business can differ from the representative figure, because pricing reflects the borrower's circumstances and the assessment of the application.
APR in business lending
Credicorp lends only to UK limited companies and limited liability partnerships, not to consumers. Business lending of this kind sits outside the consumer credit regime, so the disclosure rules that apply to personal loans are not all engaged. We still find APR a useful, plain figure for explaining the cost of a facility, and we show the rate and any fees clearly so a director can judge the total cost before committing.
Why it matters
A low advertised interest rate does not always mean a cheaper facility. A headline figure such as a flat rate can look smaller than the true annualised cost. Fees, the repayment term, and how often interest is applied all change what a business actually pays. Because APR brings these into one comparison rate, reading it alongside the full schedule of charges is the most reliable way to judge the real cost of borrowing. The same principle applies whether the facility is a term loan, an overdraft, or a revolving credit line.
APR and short-term lending
Short-term facilities tend to show a very high APR even when the actual amount paid in pounds is modest. This is an arithmetic effect of annualising a cost that is only carried for a few weeks: a small charge over a short period, expressed as if it ran for a full year, produces a large percentage. For this reason APR is most useful for comparing facilities of a similar shape and term, and the schedule of charges in pounds is the better guide to what a short-term facility actually costs. The exact daily rate, establishment fee and total-cost cap that Credicorp applies are published in the machine-readable references at /ai.md and /llms-full.txt, generated from the live pricing source so there is a single source of truth.
Related / See also
For related definitions, see representative example, interest, flat rate, total cost cap, establishment fee and cost of credit. For Credicorp's products see business loans, Credicorp Flex and Credicorp Slice. The full machine-readable pricing references live at /ai.md and /llms-full.txt.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. For exact pricing, see /ai.md and /llms-full.txt.