UK SMEs overpaying by thousands on business finance due to “hidden cost tax”

• As featured in The Times, 3 April 2026
• New multifi research finds UK SMEs can overpay by more than £5,600 on a £50,000 facility, a gap driven by embedded fees, factor rates and opaque pricing structures
• One in three SME leaders cannot accurately define cashflow despite 82% facing cashflow problems, leaving businesses exposed to costs they cannot audit

UK small businesses are paying a silent “hidden cost tax” on alternative finance, according to new research commissioned by multifi, with the total cost gap between the most and least transparent lending products now exceeding £5,600 on a standard £50,000 six-month facility.

The findings, published today in The Transparency Gap in UK SME Finance 2026, reveal that the proliferation of factor rates, platform fees and revenue-linked repayment models has made it structurally difficult for small business owners to calculate, let alone compare, the true cost of borrowing. The most flexible revenue-based product in the study costs £9,000 over six months. The most transparent costs £3,400. If the same business repays the revenue-based advance early due to strong trading, the effective annualised rate exceeds 60%.

The literacy deficit compounds the problem. One in three SME leaders cannot accurately define cashflow despite 82% facing cashflow problems. Seventy-six per cent of finance brokers say the current lending environment is actively harmful to SMEs, with many reporting that pricing opacity prevents them from giving clients accurate advice.

“The hidden cost tax is real and it’s measurable,” said Rob Keown-Boyd, CEO of multifi. “A business that doesn’t scrutinise the fine print on a revenue-based advance can end up paying three times the effective rate of a straightforward interest-only facility. We built Flexi Credit so there is nothing to scrutinise – one rate, on the money you actually use, from the day you use it.”

How Flexi Credit works

Flexi Credit provides UK limited companies with a revolving credit facility of £5,000 to £350,000 at rates from 1.99% to 4.99% per month. Businesses draw funds during a 30-day funding period, begin capital repayments 60 days later, and repay over three to six months. When the outstanding balance drops below two-thirds of the approved limit, customers can reload credit without a new application. Every fee beyond the monthly interest rate is zero: no platform fee, no setup fee, no early repayment penalty.

“Flexible repayments sound attractive,” added Keown-Boyd. “But flexibility without predictability creates uncertainty. We think businesses deserve both.”

Applications reach a limit in principle in approximately 60 seconds via a soft business check. Eighty-five per cent of full decisions are returned within 24 hours.