What fees might I pay (arrangement, broker, exit, early repayment)?

Short answer — the fees you can expect and how to approach them

When arranging business finance you may face several different fees: arrangement (or facility) fees, broker fees, exit or redemption fees and early repayment charges. Each fee can be charged as a fixed sum, a percentage of the facility, or calculated to cover a lender’s financial loss, so the exact cost varies by product and provider. Always check the credit agreement and ask for a full fee schedule before you commit.

Quick overview: who charges what and why

Lenders typically charge arrangement fees to cover the cost of setting up a loan or facility. These are often described as an arrangement, facility, or initiation fee and are common on term loans, asset finance, invoice finance and some commercial facilities. Brokers may charge either the borrower or be paid commission by the lender; fees differ by type and by whether the broker is authorised and discloses charges up front.

Exit and early repayment fees compensate lenders for lost interest or breakage costs when facilities are closed early. Exit fees can also include administration charges such as deed release and legal costs when a secured facility is redeemed. Knowing which fees are one-off versus ongoing helps you compare the total cost of finance, not just headline interest rates.

Arrangement and facility fees explained

An arrangement fee is charged by a lender for creating or underwriting a facility and can be either a fixed amount or a percentage of the loan. Typical structures include a flat fee (for example £250–£2,000) or a percentage (commonly 1%–3% of the borrowing) depending on loan size, type and risk. Sometimes the fee is taken from the loan advance, sometimes invoiced separately, so check whether it reduces your available funds.

Some lenders split the fee into an up-front sum and a deferred portion payable over the term, or they apply a “drawdown fee” when you access a portion of a revolving facility. Arrangement fees may be non-refundable if your application is declined or you withdraw, and they may not be subject to VAT because many financial services fees fall under VAT exemptions; always confirm VAT treatment with the provider. Ask for a clear written explanation of how the fee is calculated, when it is payable and whether it is added to the loan balance (capitalised) or paid from other funds.

Broker fees: types, disclosure and what to expect

Brokers can charge different fee types: an upfront finder’s fee, a success or completion fee, a percentage of the loan, or a monthly retainer for advisory work. Many commercial finance brokers are paid commission by lenders and also ask borrowers for a fee, so it’s essential they clearly disclose any charges and commissions they receive. Best Business Loans acts as an introducer and does not lend; we’ll signpost brokers and lenders who should confirm fees and commissions before detailed work begins.

Typical commercial broker success fees vary with product complexity and size — for example, small business or asset finance projects may attract fees from 0.5% to 3% of the facility value, while for more specialised or high-risk placements fees can be higher. Some brokers offer fixed-fee quotes for matching and negotiation, which can make costs easier to plan. Always request a written fee schedule and a confirmation of whether any lender commission is retained by the broker or passed on to you.

Exit fees and early repayment charges: how they work

Exit fees are charged when you close or refinance a facility and can cover administration, legal work and the lender’s calculation of lost margin. Early repayment charges (ERCs) are designed to compensate lenders for interest they will not receive if you repay before the agreed term ends. ERCs are common on fixed-rate business loans and commercial mortgages and may be calculated as a percentage of the outstanding balance or as a specified number of months’ interest.

The size of an ERC can vary widely; for commercial mortgages or long-term facilities typical early-repayment formulas can range from 1% to 5% or more, depending on remaining term, interest rate type and lender policy. Some lenders calculate a precise “breakage” cost based on the wholesale rate movements since the facility started; this can be higher than a simple percentage. Check whether your agreement allows partial prepayments without charge, and whether you must give notice (for example 30–90 days) before making a repayment to avoid penalties.

Practical steps to spot, compare and reduce fees

Ask for a full “total cost” illustration from each lender and broker including arrangement fees, ongoing management fees, broker commissions, exit fees and any ERCs. Compare the annualised cost — not just the headline interest rate — by adding fees to interest to produce an effective cost metric you can use across offers. If offers are not comparable, ask lenders to re-present figures as a single total cost over the proposed term.

Negotiate where you can: arrangement fees are often negotiable, especially if you bring strong financials or multiple facilities to the lender. Request fee waivers for new customers, or ask to capitalise fees if that improves cashflow, but confirm the impact on interest and tax. Consider staggered repayment or partial release options to minimise breakage on long-term facilities and check if a “portability” clause allows you to transfer a facility rather than repay early when moving premises or assets.

What to ask lenders and brokers — a short checklist

• Exact fee amount and whether it’s fixed, percentage-based, or variable.
• When each fee is payable and whether it’s refundable if the deal falls through.
• Whether fees are capitalised into the loan balance and the GST/VAT treatment.
• Any early repayment calculation, notice periods, and examples of typical ERCs.
• Broker commission disclosure and whether you will be charged directly.

Regulatory and transparency notes

Best Business Loans is an independent introducer and does not supply finance directly. We are not a lender and do not make lending decisions, so any fees and charges are set by the lender or broker you choose. We aim to follow FCA and ASA best practice by making clear, fair and not misleading introductions and by encouraging providers to disclose fees fully before you enter to a contract.

How Best Business Loans helps you navigate fees

Our AI-driven matching helps identify the types of providers likely to offer terms that suit your sector and borrowing purpose, saving time when you compare fee structures. We connect you with lenders and brokers who should provide the fee breakdowns you need to make an informed decision. Submitting a Quick Quote is free and lets us surface relevant providers who can give an accurate cost illustration for your business.

Key takeaways

• Expect arrangement, broker, exit and early repayment fees on many commercial products.
• Fees may be fixed or percentage-based, refundable or non‑refundable, capitalised or invoiced separately.
• Always ask for a full, written breakdown of all fees and an example total-cost calculation over the facility term.
• Broker fees and lender commissions must be disclosed — ask for clarity before committing.
• To start comparing, submit a Quick Quote and get matched with lenders or brokers who can provide detailed fee schedules.

Ready to compare fee structures and get a tailored cost illustration? Submit a Quick Quote now for a free eligibility check and to be introduced to lenders or brokers who can confirm precise fees and any early repayment terms. For commercial funding options you can review next, see our commercial finance overview: Commercial Finance.

Disclaimer: Best Business Loans provides matching and introducer services and does not lend or provide regulated financial advice. We encourage you to request written fee disclosures and seek independent legal or financial advice if needed before entering any finance agreement.