Establishment fee

An establishment fee is a one-off charge levied when a facility is set up, generally covering the lender's cost of assessing, documenting and settling the loan, and is usually calculated as a percentage of the facility amount rather than a flat dollar figure. It is charged once at settlement rather than recurring through the loan's term, which is why comparing establishment fees alongside the interest rate matters most on shorter-term facilities, where a fee amortised over a few months has a larger effect on the true cost of funds than the same fee spread across several years. Private lenders and specialist funds writing faster, more bespoke facilities generally charge higher establishment fees than banks, reflecting the greater assessment and documentation effort compressed into a shorter timeframe. All fees, including the establishment fee, are set out in the loan offer before a borrower commits, and should be read alongside the rate rather than considered in isolation.

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Short-term business loans · Line fee · Exit fee