What is an arrangement fee and is it avoidable?

2 min read

Set-up chargeWhat it is

One-offNot ongoing

Fold into costWhen comparing

What it means

An arrangement fee (or facility fee) is a one-off charge for putting the loan in place. It may be a flat sum or a percentage, and is sometimes deducted from the amount you receive rather than billed separately. Because it adds to what the loan costs, it belongs in any fair comparison — a low rate with a big fee can beat a higher rate with none, or the reverse.

What this means for your company

Always ask whether an arrangement fee applies and include it in the total repayable when comparing offers — the loan comparison calculator lets you do this. Fees are often negotiable, and some lenders charge none. It's usually tax-deductible as a cost of the loan. A lender that states all fees plainly, up front, is showing the transparency of a trustworthy lender.

What it means for you

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.

Frequently asked questions

Is an arrangement fee always charged?

No. Some lenders charge one, some don't, and it's often negotiable. Always ask, and compare offers on total cost including any fee — not on the headline rate alone, which can hide a large set-up charge.

Is an arrangement fee tax-deductible?

Generally yes — as a cost of arranging business borrowing, an arrangement fee is usually an allowable expense, like loan interest. Confirm the treatment with your accountant for your specific loan.