Are there arrangement, audit, minimum usage or termination fees to be aware of?
Quick answer
Yes — many commercial finance products can include arrangement, audit/monitoring, minimum usage (commitment) and termination or exit fees. These fees vary by product, lender and broker, and they can materially affect the overall cost of borrowing, so you should check and compare them before committing. Best Business Loans does not lend directly; we help match you with lenders or brokers who will disclose these charges.
Arrangement fees: what they are and when you’ll see them
Arrangement fees (sometimes called facility, set-up or origination fees) cover the lender’s cost of creating and underwriting a facility. They can be charged as a flat fee, a percentage of the facility, or a combination of both.
Typical amounts vary widely: smaller invoice finance or asset facilities might charge 1–3% of the limit, while complex structured facilities could be higher. Some lenders include the fee in the facility (deducted from funds), while others require it to be paid separately at drawdown.
Arrangement fees are more common on term loans, asset finance and larger invoice finance lines than on small, short-term merchant cash advances. Always ask whether the fee is refundable if the facility is not drawn, and whether it applies to renewals or increases.
What to ask about arrangement fees
Ask whether the fee is fixed or variable, whether it’s taken upfront or capitalised, and whether VAT applies. Check if a broker or introducer fee is added on top and whether any discounts apply for long-term relationships. Confirm treatment of fees in any comparison rate or APR equivalent the lender provides.
Audit and monitoring fees: why lenders charge them
Audit and monitoring fees cover the lender’s cost of verifying security, checking accounts, or carrying out site inspections and compliance checks. These are common on invoice finance, asset finance and facilities that require ongoing covenants or asset verification.
For invoice finance, periodic audits (credit control audits, debtor ledger reviews or stock audits) may be specified in the agreement — sometimes charged per visit, sometimes as an annual fee. You can read more about how invoice finance works on our invoice finance page.
Monitoring fees can be fixed or variable and may be charged monthly, quarterly or annually. Expect additional charges for out-of-hours inspections, accountancy audits, or third-party valuers if your agreement requires them.
How to reduce audit costs
Negotiate the scope and frequency of audits when possible, provide timely reporting to reduce manual checks, and ask if digital reporting can substitute physical inspections. Some lenders waive monitoring fees if you use an integrated portal or meet reporting standards consistently.
Minimum usage, commitment and unused facility fees
Minimum usage and commitment fees are charged to ensure the lender earns a return even if you don’t fully use the agreed facility. A commitment fee is normally a small percentage of the unused portion of the facility charged periodically.
Minimum usage clauses can require you to draw, or pay for, a minimum level of utilisation (for example 30% of a revolving credit facility) or face a fee. Unused facility fees ensure the lender is compensated for reserving capital that could be lent elsewhere.
These charges can be especially important with revolving lines, overdrafts and standby facilities. Make sure you understand any “minimum utilisation” threshold, how often the fee is calculated, and whether the fee is deducted from the available facility.
Practical checks on commitment fees
Ask for worked examples showing the total cost under different utilisation scenarios, and request the fee schedule in the term sheet so you can compare effective rates. Where possible, negotiate a lower fee or a stepped commitment that reduces over time as the relationship strengthens.
Termination, break and early repayment fees
Termination or exit fees compensate lenders for closing a facility, covering administration costs and, where applicable, loss of future interest. Early repayment charges (ERCs) or break costs are common on fixed-term loans or leases and can be significant.
When a lender has priced based on expected interest over a term, repaying early can create economic loss; some agreements calculate an ERC to approximate that loss. For asset finance, there may also be disposal fees, reinstatement costs or charges to release security.
Notice periods and formal termination processes are usually specified in the agreement and can include administrative charges, penalties for late notification and costs for returning or repossessing secured assets. Check whether termination requires formal legal or valuation steps that create extra fees.
Ways to limit exit costs
Negotiate early repayment terms before signing, look for loans with flexible break clauses or short notice periods, and ask whether the lender provides a redemption figure on request. Consider refinancing or assignment provisions that allow transfer to another lender with minimal fees.
How to compare fees, negotiate effectively and next steps
When comparing finance options, ask for a full fee schedule and worked examples that include arrangement, monitoring, commitment, unused facility and termination charges. Compare the total cost over realistic scenarios rather than headline rates alone.
Negotiate on points that matter: request fee caps, reduced audit frequency, a grace period before minimum usage applies, or the option to capitalise arrangement fees at a lower rate. If you deal with brokers, confirm whether their commission is disclosed and whether it affects the fee you pay.
Best Business Loans is an introducer that helps UK businesses find and compare finance providers; we do not provide loans or loan advice and we are not regulated as a lender. Use our Quick Quote to get matched with lenders and brokers who will supply detailed fee schedules and sample calculations for your business.
Checklist before you sign
- Obtain a written fee schedule covering setup, audit/monitoring, commitment, unused facility and termination fees.
- Request worked examples covering low, medium and high utilisation scenarios.
- Confirm whether fees are deducted from the facility, payable separately, subject to VAT or refundable on early exit.
- Ask your introducer or broker to explain any broker fees, commission arrangements and disclosure practices.
- Check notice periods, early repayment mechanics and the lender’s policy on releasing security.
If you want a clear, no-obligation comparison and sample costings for your situation, submit a Quick Quote via our site and we’ll match you with relevant lenders and brokers. Getting fee transparency early can protect cash flow and reduce surprises later.
Regulatory and advertising compliance
Best Business Loans aims to be clear, fair and not misleading in all communications, in line with FCA, ASA and Google advertising guidance. We only introduce you to providers and expect those providers to disclose regulated product terms and fees in compliance with applicable rules.
Always request and retain written terms and a fee schedule from any lender or broker before accepting a facility, and seek professional advice if you are uncertain about contractual words such as “commitment fee”, “break cost” or “capitalised arrangement fee”.
Key takeaways
Arrangement, audit/monitoring, minimum usage/commitment and termination fees are common and can materially affect borrowing costs. Clarify the fee type, timing, calculation and whether VAT or broker commissions apply. Compare total cost examples for realistic utilisation levels, negotiate terms where possible, and request written fee schedules before you commit. Use Best Business Loans to get matched with providers who will disclose fees and help you compare options.
Learn more about how fee structures and monitoring affect working capital facilities such as invoice finance on our dedicated guide and use our Quick Quote to check your likely costs.