What is an arrangement fee on a business loan?

2 min read

One-offCharged at set-up

% or flatOften a % of the loan

Netted offCan reduce your advance

What it covers

An arrangement fee (or facility fee) pays for assessing, documenting and setting up your finance. It can be a flat sum or a percentage of the loan, and it may be added to the balance, paid separately, or deducted from the advance.

Why the deduction matters

If a 2% fee is netted off a £50,000 loan, you receive £49,000 but may still repay interest on the full £50,000 — quietly raising the real cost. Always ask whether the fee is deducted and whether you pay interest on the gross or net amount.

What it means for you

Fold the arrangement fee into the total repayable before comparing offers.

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

See business finance fees explained.

Frequently asked questions

Do all business loans have an arrangement fee?

No. Some do, some do not. Where there is one, it can be significant, so always factor it into the total cost rather than comparing on the rate alone.

Can I avoid an arrangement fee?

Sometimes, by choosing a lender that does not charge one, though the rate may differ. What matters is the total repayable, not whether the cost is labelled a fee or interest.