Managing loans and interest

Fixed rate business loan

The fixed rate business loan has one fixed interest rate applied for the term of the loan. Should market interest rates rise or fall during the term of the fixed rate business loan, the interest cost will be unchanged.

Loans subject to eligibility and status.

Once the facility has been drawn, any early repayments to the loan may incur an early repayment charge. The amount of the early repayment charge is dependent on market interest rates at the time of making the changes. The early repayment charge will be capped at a maximum figure of 1% of the capital of the loan outstanding at the date the charge is incurred ("the early repayment charge date") multiplied by the number of anniversaries of the date of utilisation of the loan remaining during the period from the early repayment charge date until (and including) the maturity date of the fixed rate period. These costs may be substantial.

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Interest rate risk management

Corporate and commercial customers with experience of interest rate derivative transactions may wish to consider interest rate risk management solutions. These offer flexible, tailored solutions to help manage interest rate risk.

How it works

Interest rate risk management could help protect your business by hedging interest costs. Solutions offer flexible maturity dates and premium based or zero up-front premium structures. However if you opt for one of these solutions, you may no longer be able to participate in favourable interest rate movements beyond certain rates and if you wish to change the terms of the solution or cancel it break costs may be payable. It is important to be aware that for some interest rate risk management products, there is no limit to the amount of these break costs as they are dependent on interest rate levels and market expectations of how they may change at the time you wish to change or cancel the solution. We will provide you with projections of what break costs may be in certain scenarios; you should be aware though that it is not possible to forecast what break costs will be in all future scenarios.

Features

• Certainty – against adverse interest rate movements beyond certain rates, with the option to choose to benefit from certain favourable rate movements
• Choice – gives greater flexibility than a fixed rate loan
• Options – no credit facility required for some products
• Limitation - you may no longer be able to participate in favourable interest rate movements beyond certain rates

What it costs

• An up-front premium may be due for certain products, dependent on the size, term and type of structure. There are also some zero up-front premium products available, which build in additional charges to the interest rate.

Important facts

• Interest rate risk management solutions are only offered to clients with interest rate costs. Products are not designed for speculative trading.
• Credit line may be required. Ask relationship manager for details.
• For some products a break cost, which could be significant, may be payable if you seek to break or amend the terms of the contract. You should take account of the likelihood of incurring break costs and what causes them to increase before you opt for an interest rate risk management solution.
• Interest rate risk management may affect the interest rates you pay adversely and may not be suitable for your business circumstances. You should always be aware of and consider the circumstances in which it would cause your business to pay higher interest rates than the prevailing market interest rate.
• The Financial Conduct Authority (FCA) has stated that banks should stop using LIBOR before the end of 2021. UK Finance have created a handy guide for businesses, visit their website to read more about the discontinuation of LIBOR. (opens in a new window)
• Further information is available on request.

Key information documents

Key information documents for the products we offer are provided below to allow you to consider the risks, benefits, costs and suitability in line with your requirements prior to purchasing of any of these products.

Our general terms of business for professional and retail clients and Best Execution Customer Summary are also provided for your information.

• Interest rate cap
• Interest rate swap
• Interest rate collar