Revenue-based advance or bank loan: an honest comparison
If your business can get a bank loan and can wait for it, a bank loan will almost always cost less. Any lender who tells you otherwise is selling.
That is not the end of the comparison, because the two products are not competing on price alone — they are competing on speed, on eligibility, and on what happens to a business that needs money in a week rather than in two months. Here are the real numbers on both sides.
What an advance actually costs
Take a £25,000 advance on our published rates. The 5% arrangement fee is deducted at funding, so £23,750 reaches your account.
| 20 weeks | 26 weeks | |
|---|---|---|
| Cash received | £23,750 | £23,750 |
| Factor rate | 1.48 | 1.55 |
| Total repayable | £37,000 | £38,750 |
| Weekly payment | £1,850 | £1,490 |
| Total cost on cash received | £13,250 | £15,000 |
| Cost as a share of cash received | 55.8% | 63.2% |
Read that last row properly. 55.8% of the cash received, over roughly 4.6 months, is expensive money. It is not an APR and should not be compared to one directly, but the cost is real and we are not going to bury it.
What a bank loan costs, and what it asks for
A commercial bank loan at a typical business rate will cost a fraction of the figures above over a comparable period. If you qualify, that is the cheaper money, and we will say so.
What it asks in return is usually some combination of: two or more years of filed accounts, a full credit assessment, security over assets or property, a personal guarantee, and a decision timeline measured in weeks. For an established business with time and clean filings, that is a fair trade.
Where each one actually fits
| Bank loan | Revenue-based advance | |
|---|---|---|
| Cost | Lower | Higher |
| Speed | Weeks | 24–72 hours from final documents |
| Trading history | Often 2+ years | From 6 months |
| Security over property | Often | Not taken |
| Term | Years | 20 or 26 weeks |
| Repayment | Monthly | Fixed weekly, does not pause |
The honest summary: an advance buys speed and reach, and you pay for both. It makes sense when the money does something time-limited — stock for a contract already won, a repair that stops you trading, a season you cannot miss.
It makes poor sense as a substitute for a loan you could get anyway, or to cover a shortfall with no plan for closing it.
A test worth applying before you borrow at all
Ask what the money will earn or save, and by when. If a £25,000 advance funds stock that turns into more than £13,250 of additional margin inside the term, the cost is justified. If it does not, the advance moves the problem forward rather than solving it.
If you have the time and the filings, try the bank first. We would rather lose an application than fund one that should not have happened.
Questions, answered plainly
Is a bank loan cheaper than a revenue-based advance?
Yes, in almost every case, if you qualify and can wait. A bank will typically want two or more years of accounts, a full credit assessment, often security, and weeks to decide. An advance costs more and trades that cost for speed and a lower eligibility bar.
How much does a £25,000 advance cost in total?
On our published rates, £23,750 reaches your account after the 5% arrangement fee. Total repayable is £37,000 over 20 weeks or £38,750 over 26 — a cost of £13,250 or £15,000 on the cash received.
Can I get an advance if the bank has already declined me?
Often yes, because the assessment is different: it looks at how the business trades rather than at filed accounts and security. Being declined by a bank is not itself a reason we would decline. But if the reason for the decline was that the business cannot service more debt, an advance will not fix that.
Should I use an advance to buy equipment?
Usually not. For an asset you will hold for years, asset finance or a loan spreads the cost over the asset's life and normally costs less. An advance suits stock, wages, repairs and short-term gaps.
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