Credicorp
100% cost cap on a UK business loan: what it means and how it protects you
Credicorp applies a voluntary 100% cost cap on every UK business loan: you will never repay more than double what you borrowed, however long the loan runs. Here is how it works.
Every loan and every drawing from a Credicorp Flex facility carries a hard cap: the total of interest and fees on the borrowing will never exceed 100% of the amount borrowed. This article explains what that means in practice and why we apply it.
What the cap is
If your company borrows £300, the most you will ever repay across the life of that loan is £600 — the original £300 plus a maximum of £300 in interest and fees combined. It does not matter how long the loan runs, how many times a payment misses, or how many late-payment fees apply. The £300 cap on the cost side binds.
For our running-credit facility (Credicorp Flex), the cap applies per drawing. If you draw £300 and hold it for a long time, the total cost of that drawing tops out at £300. If you then make another drawing, the cap on that drawing is set fresh.
How it interacts with interest and fees
Interest accrues daily on the amount you have actually drawn and outstanding. Fees (an establishment fee, any dishonour fees if a Direct Debit fails) are added to the cost side. The 100% cap binds the total of those two together — once you have paid back the original amount you borrowed plus the same amount again in cost, the meter stops.
Why we offer it
UK consumer-credit lending carries a statutory 100% total-cost cap under FCA CONC rules. We lend to limited companies, not consumers, so the statutory cap does not apply to us. We offer the cap voluntarily because it is the right standard: it makes the worst-case cost predictable, it removes the runaway-interest risk that has historically given short-term lending a bad name, and it forces a forbearance conversation early rather than letting a balance balloon.
Where to see it in the documents
The cap is named in the Business Loan Agreement (clause 6.3 for one-time loans) and the Revolving Credit Facility Agreement (clause 6.4 for Flex). It is also called out on page 1 of every Key Information Sheet under the heading "Total cost cap". You can read the live templates at the loan agreement template and the RC facility agreement template.
If you have any question about how the cap applies to your specific borrowing, write to support@credicorp.co.uk.
Common questions about the 100% cost cap
Does the 100% cost cap apply if I miss a repayment?
Yes. The cap binds regardless of missed repayments, late fees or how long the loan remains outstanding. Once you have repaid the original amount borrowed plus an equal amount in interest and fees combined, no further cost can accrue. This protects you from the runaway interest risk that has historically affected short-term lending.
Is the 100% cost cap a legal requirement for UK business lenders?
No. The statutory 100% total-cost cap under FCA CONC rules applies to consumer credit. Because Credicorp lends to limited companies and LLPs rather than to individuals, the statutory cap does not apply to our products. We apply a voluntary cap at the same level because we believe it is the right standard for responsible lending.
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