Who usually pays arrangement fees?

Arrangement fees are typically paid by the borrower at drawdown, either from their own funds or by rolling the fee into the loan. Always confirm this in the lender offer.

Can broker fees be paid by the lender?

Yes, some brokers are paid by lenders via commission. Where lender-paid commissions are used, they should be disclosed and may be reflected in the lender’s pricing.

Are arrangement and broker fees tax deductible?

Often these fees are treated as business expenses or capitalised depending on accounting rules, but you should confirm the treatment with your accountant.

Are there broker or arrangement fees, and who pays them?

Short answer

Yes — broker and arrangement fees commonly occur in commercial lending, and the borrower usually pays them either directly or indirectly. How much you pay, when you pay it, and who actually receives the money depends on the product, the broker’s business model and how the fee is presented in the offer.

What are broker fees and arrangement fees?

Broker fees are payments made to intermediaries who arrange or introduce funding; they reward time, expertise and lender introductions. Arrangement fees are typically charged by lenders to cover documentation, underwriting and administration costs related to setting up a facility.

Both can appear as flat sums, a percentage of the facility, or as ongoing (trail) commissions. Common examples include an arrangement fee of 1–3% on a term loan, a fixed broker success fee of a few hundred to several thousand pounds, or ongoing trail commissions for multi-year facilities.

Types of fees you may see

Upfront arrangement fee (lender): usually charged at drawdown and often shown in the loan offer. Broker or introducer fee: may be a one-off success fee or a retainer; this can be charged to the borrower or paid by the lender as commission.

Who usually pays the fees?

In most commercial finance transactions the borrower pays the arrangement fee to the lender, either from their own funds or by adding it to the loan. Broker fees are normally paid by the borrower but can sometimes be paid by the lender as commission if the broker has a lender-paid commission model.

Where a lender pays the broker commission, this is typically built into the lender’s pricing and therefore indirectly affects the borrower’s cost. Full transparency is important: you should be told who is receiving each fee before you sign any agreement.

Introducer vs broker vs lender-paid commission

An introducer (like Best Business Loans) may be paid by a broker or lender to make an introduction; they usually do not charge the borrower. A broker may work with a lender-paid commission model or charge clients directly, so ask which model applies before proceeding.

How and when are fees charged?

Arrangement fees are most commonly charged at drawdown and deducted from the loan proceeds or paid directly to the lender. Broker fees can be charged up front, on completion, or as a recurring percentage based on the facility’s outstanding balance or renewal.

Different products have different norms: invoice finance may include setup and ongoing facility fees, asset finance may include an origination fee, and cashflow loans can carry an arrangement fee plus an interest margin. For example, a £100,000 term loan with a 2% arrangement fee would incur a £2,000 fee at drawdown unless rolled into the loan.

Examples by product

Cashflow loans: often have arrangement fees (1–3%) and facility fees for unused lines. Asset finance: may combine an admin fee with interest charged over the contract. Invoice finance: usually has setup fees plus a percentage margin and service charges.

Regulation, disclosure and your rights

Regulatory requirements vary depending on the type of borrower and product; some consumer-facing credit is tightly regulated by the FCA, while many forms of commercial lending for limited companies are not regulated in the same way. Even where the FCA’s consumer rules do not apply, advertising and financial promotions must remain clear, fair and not misleading under UK rules.

You should receive clear written information about all fees before you commit, including a breakdown in the lender’s offer and any separate broker engagement letter. If a broker is charging you directly, that must be disclosed and documented; if the commission is paid by a lender, you should still be told the existence of that commission and any material conflicts of interest.

What to check for in documentation

Look for an explicit fee schedule, the timing of payments, whether fees are refundable if a deal fails, and whether fees can be rolled into the facility. Also check whether fees include VAT and confirm tax treatment for your company with your accountant.

How to reduce or negotiate fees (practical steps)

Ask for a full fee breakdown from both lender and broker before you accept any offer, and compare multiple proposals to identify which fees are avoidable or negotiable. Many brokers will negotiate arrangement fees or agree to waive some charges if you demonstrate alternative options or higher loan sizes.

Other practical approaches include asking for fees to be rolled into the loan to preserve cash flow, requesting a discount for faster completion, or negotiating a lower trail commission in exchange for a larger facility. Remember to factor the total cost of borrowing — interest, fees and any ongoing service charges — when comparing offers.

Tax and accounting considerations

Typically arrangement and broker fees for business loans are treated as business expenses and may be tax deductible or capitalisable depending on accounting rules and the nature of the facility. Always check treatment with your accountant — the tax impact can influence whether you prefer to pay a fee up front or roll it into the loan.

How Best Business Loans helps

Best Business Loans is an independent introducer that uses AI to match your enquiry with lenders and brokers who are active in your sector and product type. We do not provide loans directly, and we do not take unsecured payments from borrowers for making introductions.

Our role is to explain the likely fee structures you might encounter and to connect you to providers who will disclose any commissions and arrangement costs up front. For example, if you are exploring short-term working capital, our matching can point you towards appropriate cashflow loan options with transparent fee information; see our cashflow loans overview for more detail: https://bestbusinessloans.ai/loan/cashflow-loans/.

Key questions to ask a broker or lender

Who is charging each fee, how much is it, and when must it be paid?
Is the broker paid by the lender (commission) or by me (client fee)?
Can any fees be waived, reduced or rolled into the facility?
Are fees refundable if the deal does not complete or terms change?
How will fees be shown in the final offer and repayment schedule?

Summary — key takeaways

Broker and arrangement fees are common in UK commercial finance and are typically paid by the borrower, directly or via inclusion in the facility. Lender-paid commissions exist but are often priced into the lenders’ margins and should be disclosed.

Always request a clear written breakdown of all fees, negotiate where possible, check tax and accounting treatment with your advisor, and compare total cost rather than headline rates alone. If you want a quick way to see likely costs and available providers, submit a Quick Quote with Best Business Loans to get matched to lenders or brokers and receive transparent fee guidance.

Ready to compare fees and find clarity?

Complete our free Quick Quote for an eligibility check and a Decision in Principle to see likely fees and lenders matched to your profile. Our platform is fast, confidential and free to use, and our team will flag likely charges and who will be expected to pay them before you proceed.

Start your Quick Quote now to get personalised, transparent guidance — no obligation and no hidden fees.

Important note: Best Business Loans operates as an independent introducer and does not provide loans or regulated consumer credit advice. We aim to connect you with relevant lenders and brokers and to highlight potential fees, but you should always obtain written, product-specific terms and, where appropriate, regulated advice before committing to any finance arrangement.