Blended cost of capital calculator
Most UK SMBs above £500,000 turnover run two or three debt facilities at once. The headline rate of any one facility hides the all-in cost. This calculator weights each facility by its current principal and returns a single blended APR. Above 25% flags a refinance; above 35% makes refinancing the highest-cost facility the highest-leverage move you have.
Director, FundBiz
Oliver leads FundBiz's specialty finance comparison and matching engine. With a background in UK commercial finance, he oversees lender partnerships, eligibility logic and post-decline routing.
Last reviewed: 29 June 2026
Blend your debt stack
Enter each facility's current principal balance (not the original advance) and its APR. Convert an MCA factor rate with the MCA APR converter first. Leave rows at 0 if unused.
- Total principal
- £225,000
- Total weighted cost (annual)
- £44,350
- Blended cost of capital
- 19.7%
- Read
- Above the comfortable band
The maths in plain English
- Itemise the stack. List every committed facility outstanding and its current principal balance, not the original advance.
- Convert each to an APR. Term loans and asset finance publish an APR; an MCA needs factor-to-APR conversion first; invoice finance can be expressed as an APR on the average drawn balance.
- Weight each facility. Multiply current principal by APR. A £150,000 term loan at 12% contributes £18,000; a £35,000 MCA at 65% contributes £22,750.
- Blend. Sum every weighted cost and divide by the sum of every principal. £44,350 over £225,000 is 19.7%.
The point of the blended view is that a small high-cost facility can dominate. In the example the £35,000 MCA carries more weighted cost than the £150,000 term loan, even at a quarter of the principal, because of its 65% APR. That tells you which facility to refinance first.
Worked examples
| Stack | Total principal | Weighted cost | Blended cost |
|---|---|---|---|
| Term loan + asset finance | £225,000 | £23,400 | 10.4% |
| Term loan + MCA + asset finance | £225,000 | £44,350 | 19.7% |
| Stacked MCAs + small term loan | £78,000 | £41,150 | 52.8% |
The term-loan-plus-asset-finance stack sits at a comfortable 10.4%. Add a single £35,000 MCA and the blended cost jumps to 19.7%. Three stacked MCAs push it to 52.8%, the band where consolidation becomes the highest-leverage decision available.
| Debt stack | Facilities (principal @ APR) | Total principal | Weighted annual cost | Blended cost |
|---|---|---|---|---|
| Term loan + asset finance | £180,000 @ 11%, £45,000 @ 8% | £225,000 | £23,400 | 10.4% |
| Term loan + MCA + asset finance | £150,000 @ 12%, £35,000 @ 65%, £40,000 @ 9% | £225,000 | £44,350 | 19.7% |
| Stacked MCAs + term loan | £25,000 @ 55%, £18,000 @ 70%, £15,000 @ 80%, £20,000 @ 14% | £78,000 | £41,150 | 52.8% |
Source: FundBiz blended cost of capital worked examples
Blended cost = sum(current principal x APR) / sum(current principal), weighted by current principal balance. MCA figures use equivalent APR. Illustrative; convert factor rates to APR before blending.
View as plain-text Markdown
### Worked examples: blended cost of capital across UK SMB debt stacks | Debt stack | Facilities (principal @ APR) | Total principal | Weighted annual cost | Blended cost | | --- | --- | --- | --- | --- | | Term loan + asset finance | £180,000 @ 11%, £45,000 @ 8% | £225,000 | £23,400 | 10.4% | | Term loan + MCA + asset finance | £150,000 @ 12%, £35,000 @ 65%, £40,000 @ 9% | £225,000 | £44,350 | 19.7% | | Stacked MCAs + term loan | £25,000 @ 55%, £18,000 @ 70%, £15,000 @ 80%, £20,000 @ 14% | £78,000 | £41,150 | 52.8% | Source: FundBiz blended cost of capital worked examples Blended cost = sum(current principal x APR) / sum(current principal), weighted by current principal balance. MCA figures use equivalent APR. Illustrative; convert factor rates to APR before blending.
“Principal weighting is the right answer for the refinance decision, but it can flatter a stacked-MCA position, because the blended APR does not show the cashflow timing. An MCA takes a fixed daily or weekly holdback, so three stacked advances can consume cash far faster than a 52.8% blended figure suggests, even when the headline number already looks alarming. When I see more than three concurrent facilities or debt service above 40% of free cashflow, the blended cost is the trigger to model the daily cash drain, not the end of the analysis.”
FAQ
What is blended cost of capital?
The weighted-average cost of every committed debt facility, weighted by current principal balance. It reflects the all-in cost of debt to the business rather than the headline rate of any one facility. Most UK SMBs running multiple facilities have a blended cost meaningfully different from any individual rate.
When is the blended cost dangerous?
Above 25% blended is the working threshold. A 25% to 35% blended cost is high relative to typical UK SMB returns on capital. Above 35%, refinancing the most expensive facility becomes the highest-leverage management decision available.
How does an MCA distort the blended view?
An MCA equivalent APR is high (30% to 90%) but the principal is normally small and the term short. A £30,000 MCA at 70% sitting alongside a £200,000 term loan at 9% produces a blended cost in the high teens. Stacked MCAs running concurrently are where the blended view pushes past 30%.
Should I weight by principal or by remaining cost?
Principal balance is the standard weighting and the right answer for the refinance decision. Some advisers use remaining-total-cost weighting (remaining principal plus remaining interest) for a forward-looking view. Both are useful; principal-weighted is the convention.
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Last reviewed: 29 June 2026.