Financing · Topic guide
Debt pricing
The interest, fees and other financial costs attached to a borrowing arrangement.
A quoted interest rate is only one part of debt cost. The usable cash advanced, fees paid or deducted, repayment pattern and period outstanding all influence the borrower’s burden. Two loans with the same headline rate can create very different monthly cash demands. Compare the complete schedule rather than choosing a lender from a percentage alone.
The collection’s five-year repayment illustration uses an assumed 10% rate on £2.5m starting bank debt, producing £250k year-one interest in its simplified calculation. The accompanying benchmark explanation is questionable and should not be used as current pricing guidance. A separate 9–10% cost-of-capital comment omits the lender, instrument, date and fee basis. These figures are source examples, not available offers. Watch source Watch source
Put fees alongside the interest schedule and state whether they are paid separately or withheld from proceeds. The source describes bank legal fees reducing the amount delivered at completion, leaving a cash gap even though the gross facility looked sufficient. That issue affects both funding adequacy and economic cost. Also identify whether interest changes as principal falls, whether the rate can reset and what a refinancing would require. The collection does not provide a comprehensive pricing comparison, so no single rate should become a default assumption for every acquisition. Watch source
Follow the connections
Amortization · Debt service · Bank debt.
Continue in the course: Debt terms and covenants.
Numbers in context
- HVAC amortization · £75,000/month for 36 months; preferred 4–5 yearsPersonal experience
A monthly repayment burden motivates Sey's preference for a longer repayment schedule.
The payment is not separated into interest and principal.
- High leverage interest example · £7m debt x10% = £700k/year interestHypothetical
A high-debt example shows interest consuming much of the earnings available to the buyer.
Principal repayments, taxes and other cash needs still have to be funded.
- Low leverage interest example · £1m debt x10% = £100k/year, 10% of earningsHypothetical
A lower-debt example contrasts the interest burden at the same assumed interest rate.
Complete debt funding is a hypothetical assumption, not a documented capital stack.
- Traditional carry · 20% above hurdleRule of thumb
The discussion introduces a manager's share of investment profits above a hurdle.
The waterfall is incomplete; carry is not loan interest or direct equity ownership.
- CEO transition and AGM · CEO until April 2025; FY July–June; AGM within 6 monthsPersonal experience
The account describes a change from executive leadership to the chair role around the annual meeting.
Dates and governance arrangements are self-reported; the AGM interval is not presented here as legal advice.
Sources & further viewing 3 videos
The explanations on this site are independent synthesis. Follow each original for full context. A reported experience is not independent proof of a transaction.
- Quantitative claim cost of capital
- Educational Debt-service worked example
- Educational Lender legal fees reduce usable proceeds