15 Most Common Business Loan Fees

Alternative financing is a great way of securing fast and easy funds for your business, but depending on who you are borrowing from, there could be fees attached. There are a variety of fees that could be applied to the type of funding you are trying to secure. 

Breaking down what each fee is about and how it could ultimately affect your total financing is important; it can influence your decision to secure funds and impact your payment terms. Here are 15 of the most common fees attached to business loans:

1. Origination Fee – This is a one-time fee charged by the lender for processing and setting up the loan. It typically covers administrative tasks such as underwriting, credit checks, and preparing the loan documents. Origination fees are usually calculated as a percentage of the loan amount (commonly 0.5%–3%), and they may either be deducted from the funds before disbursement or added to the loan balance.

2. Application Fee – Some lenders charge an upfront, non-refundable fee just to apply for a loan. This fee helps cover the cost of reviewing your application, pulling credit reports, and conducting preliminary evaluations—even if the loan is not approved. Not all lenders charge this, but when they do, it’s often a flat fee.

3. Packaging Fee – Especially common with SBA loans, this fee covers the cost of preparing and organizing the detailed documentation required for loan submission. Lenders or third parties may charge it to ensure your application package meets all requirements and is properly structured, which can increase the chances of approval.

4. Referral Fee – When a broker, consultant, or third party connects a borrower with a lender, a referral fee may be charged. This is essentially a commission for bringing in the deal. Sometimes the lender pays this fee directly, while in other cases it’s passed along to the borrower as part of the loan costs.

5. Credit Check or Credit Report Fees- Many lenders transfer the cost of obtaining your credit report to the borrower, typically less than $100.

6. Appraisal Fees – When a business uses assets like real estate, equipment, or inventory as collateral, the lender will often require a professional appraisal. This ensures the assets are accurately valued and adequately cover the loan in case of default. The borrower typically pays this fee, which varies depending on the type and complexity of the asset being appraised.

7. Underwriting Fees – Underwriting involves the lender verifying the borrower’s financial information, evaluating creditworthiness, and assessing the overall risk of the loan. The underwriting fee covers the cost of this review and analysis, helping the lender decide whether to approve the loan.

8. SBA 7(a) Guarantee Fees – For loans backed by the Small Business Administration (SBA), the SBA guarantees a portion of the loan to protect the lender. This guarantee comes at a cost, usually passed on to the borrower as a fee. The fee amount depends on the loan size and term, and it ensures that lenders are willing to provide financing to small businesses that might not otherwise qualify.

9. Wire Transfer Fees – Some borrowers choose to receive loan funds via wire transfer for faster access rather than the slower ACH (Automated Clearing House) method. Lenders may charge a wire transfer fee to cover the cost of sending the funds electronically.

10. Monthly or Annual Fees – Certain business loans, especially lines of credit, may include ongoing administrative fees. These can be monthly charges to maintain the loan account or annual fees to keep a line of credit active. These fees help the lender cover administrative costs associated with servicing the loan.

11. Draw Fees – With a business line of credit, lenders may charge a small percentage each time you withdraw funds. This fee helps cover the administrative cost of processing each draw. While the percentage is usually low, it can add up if you frequently access your line of credit.

12. Late Fees / Insufficient Funds Fees – If a payment is made past the due date or if a payment bounces due to insufficient funds, lenders typically impose a flat fee. These charges are designed to encourage timely repayment and cover the additional costs associated with handling missed or failed payments.

13. Overdue Collection and Overdue Fees – When a borrower misses multiple payments or defaults on their loan agreement, lenders often impose additional overdue charges. These fees help cover the costs of collection efforts, including contacting the borrower, sending notices, and involving a collections agency.

14. Unused Line Fees – Some lenders charge a fee on the unused portion of a business line of credit. This fee is usually a small monthly percentage and is designed to compensate the lender for keeping credit available, even if the borrower doesn’t use it. It’s most common with larger lines of credit, where borrowers are expected to draw on them regularly.

15. Prepayment Fees – While paying off debt early might sound like a smart move, some loans include a penalty for doing so. Prepayment fees protect the lender from losing expected interest income if the borrower pays off the loan before the agreed-upon term. Depending on the structure, this fee can sometimes outweigh the interest savings of early repayment.

There’s a multitude of alternative lenders out there trying to help you secure money, but not necessarily being transparent on the amount of fees that can be attached to your file. As a boutique lender, Capital Infusion, we make sure you know what is going into your terms and what they are for so you can make an informed decision for your business. Talk to a representative today to find out what your business qualifies for!