# What is APR? And why do short-term lenders use a daily rate?

A plain-English explanation of Annual Percentage Rate (APR) and why short-term business lenders use a daily rate — why APR comparisons mislead for credit held for weeks rather than years.

**Site:** [creditcorp.co.uk/learn/what-is-apr-and-why-daily-rate/](https://creditcorp.co.uk/learn/what-is-apr-and-why-daily-rate/)

Creditcorp is the growing name for the Credicorp group. Credicorp Limited is the lender behind it — short-term working capital for incorporated UK businesses. No personal guarantee on any product. This page is a guide; applications go to [credicorp.co.uk](https://credicorp.co.uk/).

## Contents

- What APR actually measures
- The maths, side by side
- Why a daily rate is more transparent for short-term credit
- How to compare credit costs honestly
- APR and daily rate questions
- Related guides
- Transparent pricing, honest comparisons

## Step-by-step guide

**Step 1: Identify the rate type being quoted**

For consumer products (mortgages, personal loans, credit cards) the law requires APR. For business credit products like Credicorp's, the lender publishes the daily rate and fees. Note which you are looking at before comparing.

**Step 2: Calculate the actual cost in pounds for your intended holding period**

For a daily-rate product: balance × daily rate × number of days = interest. Add any fixed fees. For an APR product: convert the APR to a daily or monthly rate equivalent and multiply by the number of days/months you intend to hold the credit. Do not compare the rate percentages directly — compare the total pounds for the same period.

**Step 3: Apply the 100% cost cap as the worst-case ceiling**

For Credicorp products, the total charges (interest plus fees) can never exceed 100% of the amount borrowed. At 0.25%/day on a Bridging Loan this ceiling is reached at around 400 days — far beyond the 84-day maximum term. Use this as the absolute upper bound when stress-testing the cost.

**Step 4: Decide based on total cost, speed and term fit**

Once you have comparable total-cost figures in pounds for the period you actually need, combine with: how quickly the credit is available, whether a personal guarantee is required, and whether the structure (lump sum vs revolving) fits the need. Total cost is one input, not the only one.

## Frequently asked questions

**What is APR?**

APR stands for Annual Percentage Rate. It is a standard way of expressing the total cost of credit — including interest and mandatory fees — as a single yearly percentage, so products with different structures can be compared on one figure. APR was designed for consumer loans held over one year or more, where the annualised cost is a meaningful guide to what the borrower will actually pay.

**Why is APR misleading for short-term business credit?**

APR assumes the credit is held for a full year. Short-term business credit is designed to be held for days or weeks, not 12 months. When a 0.25%/day rate is annualised into an APR, the result looks enormous — because it is calculating what the cost would be if the loan ran for a year. It won't. A company that borrows £10,000 for 14 days at 0.25%/day pays £350 in interest. The APR figure for that transaction tells you nothing useful about that £350.

**Why do short-term lenders use a daily rate instead of APR?**

A daily rate directly reflects how the cost accrues. With a daily rate, every day the company holds the balance it pays exactly 0.25% of the outstanding amount. The total cost is simply balance × rate × days. This is transparent, predictable, and directly rewards early repayment — repay on day 10 instead of day 30 and you pay for 10 days, not 30. An APR would not capture this directly.

**Does Credicorp publish an APR?**

Credicorp products are business credit products, not consumer credit. Consumer credit regulation — which requires representative APR disclosure — applies to consumer lending, not to lending to bodies corporate under Article 60B of the FSMA Regulated Activities Order 2001. Credicorp publishes the daily rate (0.25%/day on the Business Bridging Loan and Flex facility), the establishment fee (£5 on the Bridging Loan), and the flat fee on Slice (6%). These figures, combined with the 100% cost cap, give a complete and honest picture of what the credit costs.

**How should I compare the cost of short-term business credit?**

The most honest comparison is total cost in pounds for the holding period you actually intend. For a Credicorp Business Bridging Loan: principal × 0.0025 × days + £5 = total charge. For a bank product: add arrangement fee, annual review fee and interest at the stated rate for the period. Then compare the actual pounds. This is the number that matters — not an annualised rate that assumes credit held for a year.

## About Creditcorp / Credicorp

Credicorp Limited is a UK short-term business lender. Products: Business Bridging Loan (14–84 days, 0.25%/day), Credicorp Flex (revolving credit, 0.25%/day on drawn balance), Credicorp Slice (invoice-backed, flat fee). Incorporated UK companies and LLPs only. No personal guarantee. No debenture. Same-day decisions. Total charges capped at 100% of principal.

- [Apply or get a quote](https://credicorp.co.uk/)
- [Products overview](https://credicorp.co.uk/products/)
- [Eligibility](https://credicorp.co.uk/eligibility/)
- [All learn guides](https://creditcorp.co.uk/learn/)