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Daily interest:
how the cost builds up.
Credicorp products charge 0.25% of the outstanding balance per day. No monthly totals, no compounding tricks — just the balance multiplied by the daily rate multiplied by the number of days. And the total never exceeds what you borrowed.
Short-term business credit is priced daily, not annually. That matters because the practical cost of borrowing for 14 days is very different from the cost of borrowing for 14 months. This guide walks through exactly how daily interest accrues on the Credicorp Business Bridging Loan and Flex revolving facility, with worked examples at different holding periods.
The numbers on this page reflect the published terms at credicorp.co.uk as at publication. Verify the current rate and fees with the lender before relying on these figures for a live decision.
The daily rate, explained
Each day the outstanding balance is multiplied by 0.25% (0.0025 as a decimal). That gives the day's interest charge. The charge accrues for every calendar day — weekends and bank holidays included — until the balance is repaid.
On a £10,000 balance:
- Day 1 interest: £10,000 × 0.0025 = £25
- 7 days: £25 × 7 = £175
- 14 days: £25 × 14 = £350
- 30 days: £25 × 30 = £750
- 60 days: £25 × 60 = £1,500
Add the one-time £5 establishment fee on a Bridging Loan, and you have the total charge. The daily rate does not compound — it applies to the outstanding balance, which changes only when you make a repayment.
Worked examples
At three different amounts, three different holding periods. Principal × rate × days.
Example 1 — £5,000 over 14 days
A company bridges a supplier invoice of £5,000 for two weeks while waiting for a customer to pay.
- Daily charge: £5,000 × 0.0025 = £12.50
- 14 days' interest: £12.50 × 14 = £175
- Plus establishment fee: £5
- Total cost: £180 — on a £5,000 advance
The 100% cost cap limit on this draw would be £5,000 — the £180 total is well within it.
Example 2 — £20,000 over 30 days
A company takes a £20,000 bridging loan for a month to cover a payroll cycle while waiting for a large invoice to clear.
- Daily charge: £20,000 × 0.0025 = £50
- 30 days' interest: £50 × 30 = £1,500
- Plus establishment fee: £5
- Total cost: £1,505 — on a £20,000 advance
If that same company repaid on day 20 instead of day 30, the interest would be £50 × 20 = £1,000 — saving £500 by repaying 10 days early, with no penalty for doing so.
Example 3 — £50,000 Flex facility, partial draw
A company has a £50,000 Flex revolving facility. It draws £15,000 on day 1 for stock, repays £10,000 on day 15, then repays the remaining £5,000 on day 28.
- Days 1–14 (£15,000 drawn): £15,000 × 0.0025 × 14 = £525
- Days 15–27 (£5,000 drawn after partial repayment): £5,000 × 0.0025 × 13 = £162.50
- Day 28: balance cleared.
- Total interest: £687.50
No establishment fee on Flex. The limit of £50,000 is available again after the balance clears — the company has not used up its facility, just the specific amount drawn and repaid.
The 100% total cost cap
Across all Credicorp products, the total charges — interest plus any fees — will never exceed 100% of the original amount drawn. If a company borrows £10,000, the absolute maximum it will ever pay in charges is £10,000. Principal plus charges: £20,000 at the ceiling, nothing more.
At 0.25%/day, a balance has to be held for 400 days before accrued interest alone reaches 100% of the principal (100% ÷ 0.25% = 400). This is well beyond the maximum 84-day term of the Business Bridging Loan, and far beyond any typical Flex holding period. In practice the cap is a safety net, not a normal outcome.
For the full detail on how the cap interacts with early repayment and what it means in different scenarios, see the 100% cost cap article.
Daily rate vs APR — why the comparison breaks down
Annual Percentage Rate (APR) annualises the cost of credit so that products with different structures can be compared on a standard basis. It is a useful tool for mortgages and personal loans held over years.
For products designed to be held for two to twelve weeks, APR is a poor guide to practical cost. A 0.25%/day rate expressed as a compounding APR produces a very large number — one that implies the cost if the loan ran for a full year, which is not how these products are used.
The most useful cost comparison for short-term business credit is the total charge in pounds for the holding period you actually intend. The worked examples above give that directly. For any specific scenario, the formula is: balance × 0.0025 × days = interest. Add the establishment fee. Check against the 100% cap. That is the number that matters.
How to calculate the cost for your company
Four steps, no specialist knowledge required.
- Note the outstanding balance on each day. On a Bridging Loan this is the drawn amount. On Flex, only the drawn portion of the limit — idle headroom costs nothing.
- Multiply by 0.0025 (the daily rate). This gives the per-day interest charge. On £10,000 that is £25/day. On £5,000 it is £12.50/day.
- Multiply by the number of days held. For a 14-day bridge on £10,000: £25 × 14 = £350. For a 30-day hold: £25 × 30 = £750. Every day you repay earlier saves the daily charge.
- Add fees, then check the 100% cap. Bridging Loan adds a £5 establishment fee. Verify the total (interest + fees) does not exceed the drawn principal. It almost certainly will not on a holding period below 84 days, but the cap is the hard ceiling.
Daily interest questions
The questions directors ask most about how daily interest accrues and what the cost looks like.
What does "daily interest" mean on a business loan?
Daily interest means the charge accrues on each calendar day the balance is outstanding, rather than being fixed at the start. On Credicorp products, the rate is 0.25% of the outstanding balance per day. If a company borrows £10,000 and holds it for 14 days, the interest is £10,000 × 0.25% × 14 = £350. On day 15 the company owes £350, not the full 14 days' worth in one go on day one.
How does a daily rate relate to an annual percentage rate (APR)?
A daily rate of 0.25% compounds to a high APR when expressed as an annualised figure, which is why published APR figures for short-term business credit look large. But the analogy breaks down for very short-term borrowing: a company that holds £10,000 for 14 days at 0.25%/day pays £350. That same company would not pay 12 months of equivalent charges because short-term credit is designed to be repaid in weeks, not years. APR is a useful comparison tool for loans held over full years; for short bridges it overstates the practical cost.
Does it cost less to repay early?
Yes — that is the direct consequence of daily accrual. Interest charges stop as soon as the balance is repaid. A company that repays on day 10 instead of day 30 pays for 10 days of interest, not 30. There is no early repayment penalty on Credicorp products. The total cost is bounded by the 100% cost cap — in no scenario does the company pay more in total charges (interest plus fees) than the amount it originally borrowed.
What is the 100% cost cap and when does it apply?
The 100% cost cap means the combined total of all interest charges and fees on a Credicorp product will never exceed the original amount borrowed. If a company borrows £5,000, the total it will ever pay in charges is capped at £5,000 — so the maximum it could ever owe in total (principal plus charges) is £10,000. In practice the daily accrual model means this cap is rarely reached, because the product is designed for short holding periods. The cap is a hard ceiling, not a target.
How does daily interest work differently on Credicorp Flex vs the Bridging Loan?
On the Business Bridging Loan, the full approved sum is drawn on day one and interest accrues on the full balance from that point. On Credicorp Flex, interest accrues only on the balance actually drawn — not on the unused headroom of the limit. So a company with a £20,000 Flex limit that has only drawn £5,000 pays interest on £5,000, not £20,000. This makes Flex more cost-efficient when the company draws in tranches or repays and redraws frequently.
Where to go next
For the hard ceiling on total charges, read the 100% cost cap. For what happens when you pay off early, read early repayment explained. For how the Flex facility draws and repays differently to a Bridging Loan, read what a revolving credit facility is. All the guides are on the Learn hub.
Borrow only what you need, only as long as you need it
Daily interest means repaying early always costs less. No penalties. No fine print.