When comparing business credit products, it’s easy to focus on the headline numbers — a monthly interest rate, a flat fee, or the total repayment. But to make an informed decision, it’s important to look deeper. Three key factors affect the true cost of credit:

1. Repayment structure — Are you repaying in a lump sum or in monthly instalments?

2. Fee model — Is the fee calculated on the full amount borrowed or only on what’s outstanding?

3. APR (Annual Percentage Rate) — This is the gold standard for comparing costs across products. It accounts for time, repayment frequency, and fee structure to give a fair, apples-to-apples comparison.

With those principles in mind, let’s compare two common types of business credit: instalment-based credit facilities and Mimo’s short-term working capital facility.

Let’s break it down.

Long-Term, Instalment-Based Repayment

This is what you’ll typically see from other lenders or embedded finance providers:

• Structure: You draw down a lump sum, then repay in equal monthly instalments, typically over 3-12 months.

• Fee: 1–1.5% per month — usually applied to the full borrowed amount.

• Impact: Even as your balance drops, you're paying fees as if you still owed the full amount.

Example:

• Borrow £10,000 over 3 months at 1.25% per month.

• Monthly repayments: ~£3,516

• Total repayment: £10,548

• Total cost: £548

• Effective APR: ~24.6%

Let's compare this to Mimo Flex.

Mimo Flex: Short, Lump-Sum Repayment

• Use case: Defer supplier invoices for 30–60 days.

• Structure: One-off lump-sum repayment at the end of the period.

• Typical fee: 1.5–2% per 30 days.

• Features: No compounding. No early repayment penalties. Transparent and simple.

Example:

• Defer a £10,000 invoice for 60 days at 1.5% per 30 days.

• You repay £10,300 at the end of the period.

• Total cost: £300

• Effective APR: ~18.1%

• Why it’s lower: You only pay a fee for the time you use the funds, and you repay everything at once.

  
  

The APR Tells the Full Story

Here’s a quick comparison to illustrate the difference:

APR gives you the true cost of credit over time. When comparing two products with different structures, it’s the only fair benchmark. In particular, note instalment based credit products often require you to repay funds you have paid for, but not been able to use.

The Bottom Line: Choose the Right Credit Product for the Job

Different credit products are good for different use cases. Mimo’s credit product is designed specifically for managing short-term supplier payments. It’s quick, flexible, and transparent — and often significantly cheaper than it first appears, especially compared to traditional working capital loans.

Want to see how it works for your business?

Learn more about Mimo Credit or request to chat with our team — we’ll walk you through your options and help you find the best fit for your cash flow.