My company borrowed £500,000 but must repay nearly £1 million — is this normal?

This is not uncommon in the market for alternative or specialist business finance, particularly facilities structured on a factor rate basis rather than as interest-bearing loans. A company borrowing £500,000 at a factor rate of 1.95 has a total repayment obligation of approximately £975,000 — nearly £1 million. The factor rate is a fixed multiplier applied to the original advance; unlike an interest rate, it does not reduce with early repayment. What is important to recognise is the true cost as a proportion of the amount borrowed, and whether the full repayment obligation is accurately reflected on the company's balance sheet. In some cases these facilities are recorded as a £500,000 liability when the contractual repayment obligation is nearly double that figure. This misrepresentation — even if unintentional — can affect the accuracy of financial reporting and the assessment of the company's solvency. If your company is in a facility of this kind and the repayments are causing financial difficulty, professional advice on the restructuring options available should be sought as early as possible.