What do APR and EAR mean?
APR and EAR are two methods of standardising price in lending. Both are applicable to GrowthLine in certain contexts, and so we try and present both to help you better compare the cost of finance:
The Annual Percentage Rate (APR) is a single percentage, representing the cost of finance averaged over one year, including interest as well as any associated charges, fees or additional costs. You may be familiar with seeing it in relation to credit cards or mortgages.
The Equivalent Annual Rate (EAR) is a single percentage representing the interest cost averaged over one year, that takes into account the effect of compounding, but does not include other charges or fees. It is used when representing the cost of a bank overdraft.
With a GrowthLine you will have a single facility which could replace your bank overdraft and other types of finance you may consider for your business. We think it's important to express our costs in a manner which allows you to easily compare with all types of borrowing. If you are considering another provider and they haven't quoted you a price using one of these rates, you should ask them to do so.
It's important to note that business finance is currently unregulated in the UK, and providers are not obligated to use these standardised metrics in the same way consumer lenders are. If you'd like to learn more about why we think that's a bad idea, you should visit the APR 4 SMEs campaign (which Growth Street has been involved in launching).