Quick answer
Business loan fees are the charges on top of the loan's interest or cost. Common ones include establishment or application fees, valuation and legal fees for secured loans, account or line fees, dishonour and default fees, early repayment or break costs, and discharge fees for removing a mortgage or caveat. The cleanest way to compare offers is to add every fee and the loan cost into one total cost of finance in dollars.
Key points
- Fees can add materially to a loan's cost, especially on short terms
- Secured loans usually carry valuation, legal and discharge costs
- Ask what each fee is, when it's charged and whether it's refundable
- Compare offers on total cost of finance in dollars over the same term
A loan offer can look great on page one and different on page six. The difference is usually fees. None of them are sinister on their own. Together, they can change which offer is actually cheaper.
What are the common business loan fees?
| Fee | What it’s for | When it’s charged | Common on |
|---|---|---|---|
| Application / establishment | Setting up the loan | At the start, often taken from the funds | Most loans |
| Valuation | Valuing the property | Before approval or settlement | Secured loans |
| Legal / documentation | Preparing and checking loan documents | At settlement | Secured loans, large loans |
| Registration | Registering a mortgage or caveat | At settlement | Secured loans |
| Account / line fee | Keeping the facility open | Monthly or annually | Lines of credit, some loans |
| Broker or referral fee | Arranging the loan, if charged | Disclosed upfront | Some arrangements |
| Dishonour fee | A failed direct debit | Each time it happens | All loans |
| Default fee | Falling behind | While in arrears | All loans |
| Early repayment / break | Repaying ahead of schedule | At payout | Some loans |
| Minimum cost | A set minimum, however early you repay | At payout | Some short-term loans |
| Discharge | Removing security from the title | At payout | Secured loans |
Not every loan has every fee. That’s exactly why you need to ask.
Which fees catch owners out?
- Fees deducted from the loan. Borrow $100,000, receive $96,000. Check the net amount.
- Minimum costs on short-term loans. Repay early and still pay a set portion of the cost.
- Valuation fees on a deal that doesn’t go ahead. Ask if they’re refundable.
- Default fees that stack. Missed repayments can snowball. Call the lender early.
- Discharge and early payout combined. Paying off a secured loan early can trigger both.
Got an offer you can’t decode? Our experts read these every day. Start step 1 and ask us. There’s no credit check to enquire.
How do you compare offers fairly?
Add everything up. We call it the total cost of finance: the loan’s interest or cost plus every fee you’ll pay over the term you actually expect to keep it.
Illustrative comparison
Two invented offers for a $150,000 loan over 24 months:
| Offer A | Offer B | |
|---|---|---|
| Loan cost over the term | $30,000 | $34,500 |
| Establishment fee | $4,500 | $1,500 |
| Valuation and legal | $3,000 | $0 |
| Monthly account fee (24 months) | $1,200 | $0 |
| Discharge fee | $500 | $0 |
| Total cost of finance | $39,200 | $36,000 |
Offer A’s headline cost looks lower. Once fees are in, Offer B is cheaper by $3,200. Now ask: what if you repay at month 12? The early payout terms could flip the answer again. Our full guide to the total cost of finance walks through that too.
What protections apply to small business loan contracts?
ASIC says unfair contract term protections can cover small businesses with fewer than 100 employees or annual turnover under $10 million, for financial product contracts with an upfront price of $5 million or less. ASIC also notes that lenders who only make commercial loans aren’t required to hold a credit licence or be AFCA members, so ask whether a lender is an AFCA member before you sign. Neither replaces reading the offer carefully or getting advice.
Repayment reality check (illustrative)
Fees don’t just change the total. They change the repayment. Using Offer B above: $186,000 over 24 months is $7,750 a month. On $95,000 of monthly turnover, that’s 8.2%. Add any fee you’ve missed and re-run it in the repayment planner.
Questions to ask about any loan offer
- What’s the total cost of finance in dollars over the full term?
- Which fees are taken from the loan amount?
- What would it cost to repay at month 6, and month 12?
- What fees apply if a repayment fails?
- Is the lender an AFCA member?
What our expert will ask you on the call
- Do you already have an offer you’re comparing against?
- How long do you expect to keep the loan?
- Might you repay early from a sale or big payment?
- Is the loan secured, and is there an existing mortgage?
- What matters most: lowest repayment or lowest total cost?
Myth or reality: fees
“No establishment fee means a cheaper loan.” Not if the loan cost or ongoing fees are higher. Always compare totals.
“Fees are fixed and can’t be questioned.” You can always ask what a fee covers, whether it’s refundable and whether it can be reduced.
“Discharge fees only apply if I repay early.” They usually apply whenever a mortgage or caveat is removed, including at the normal end of the term.
Fee checklist for your next offer
Copy this list and fill it in for every offer you receive:
- Amount borrowed, and amount actually received after deductions
- Loan cost over the full term, in dollars
- Upfront fees (establishment, valuation, legal, registration)
- Ongoing fees, multiplied by the number of months
- Discharge fee
- Payout cost if you repay at month 6 and month 12
- Total cost of finance over the term you expect to keep the loan
With that list complete, the cheapest offer is usually obvious.
No surprises, just numbers
We’d rather you understood every dollar before you sign.
Go to step 1. It takes about 60 seconds, there’s no credit check to enquire, we don’t send your details off to a parade of lenders, and a real expert walks you through the costs. Give us accurate details on the form, including any offers you already hold, so we can compare like with like from the first call.
Frequently asked questions
What is an establishment fee?
A one-off charge for setting up the loan, often deducted from the loan amount or added to the balance. Check whether it's taken from the funds you receive, because that changes how much you actually get.
Do I pay for the valuation on a secured business loan?
Usually, yes. The lender orders the valuation and the borrower generally pays for it, sometimes upfront. Ask whether it's refundable if the loan doesn't proceed.
What is a discharge fee?
A charge for removing the lender's mortgage or caveat from the property title once the loan is repaid. It's common on property-secured loans.
Can I negotiate business loan fees?
Sometimes. Fees vary by lender and by deal. The best leverage is a clean application and a clear comparison of total cost across offers.
Are business loan fees tax-deductible?
Some borrowing costs on business loans can be deductible, sometimes over several years. Rules vary, so check with your accountant.