Can I repay a business loan early?

If the agreement carries no early repayment charge, yes, and you pay interest to the day you repay. Only the agreement can tell you. Read the prepayment clause, and ask the lender for a written settlement figure.

A charge on repaying a fixed-rate loan early that passes to you the loss the lender suffers in unwinding the funding it arranged at your fixed rate. It depends on how market rates have moved since you borrowed, so it is worked out on the day you repay. Ask for a written figure valid to a stated date before you commit.

For regulated credit, such as a loan of £25,000 or less to a sole trader or small partnership, section 95A of the Consumer Credit Act 1974 caps the charge at 1% of the amount repaid if more than a year remains, or 0.5% otherwise. A loan to a limited company is outside that law, and the agreement sets the charge.

You can pay it off, but the total repayable is fixed by the factor rate when the advance is made, so repaying early does not reduce it unless the provider agrees a discount. Ask for any early settlement terms in writing before you sign.

Not automatically. A guarantee can cover all the company’s debts to the lender, including debts beyond the loan you repaid, and can outlast it. Ask the lender for a written release of the guarantee when the loan is cleared, along with the release of any security.

Refinancing replaces existing business debt with a new loan, at a lower rate, over a longer term or as one payment in place of several. A longer term cuts the monthly cost but can raise the total you repay, and early repayment charges on the old debt add to the bill. When the old debt is cleared, get its personal guarantees and charges formally released. The full answer.

A factor rate is the multiple a merchant cash advance or short-term lender applies to the amount you receive to set the total you repay. A factor rate of 1.25 on £30,000 means you repay £37,500. It is a fixed cost that says nothing about time, so turn it into a cost per month or per year before you compare it with a loan. The full answer.

You file form MR04, a statement of satisfaction, at Companies House. The charge then shows as satisfied on the company’s public record, so a lender, a buyer or a supplier reading the register can see the debt behind it has been repaid. The full answer.

A business loan is a sum your business borrows and repays with interest over a fixed term, in regular instalments. The lender prices it on the risk it reads in your accounts, your bank statements and any security you offer. Compare offers on the total you will pay in pounds, counting every fee. The full answer.