Quick answer
Short-term business loans can carry establishment, application, legal, valuation, documentation, line or account-keeping, early repayment, extension, default and discharge fees. Some are paid up front and never refunded; others arise only if something happens, such as early payout or a missed payment. Ask for every fee as a dollar amount in writing, then add them to the time-based cost to get the true total.
Key points
- Split fees into three groups: up-front, ongoing and event-triggered.
- Up-front fees are rarely refunded and weigh most heavily on short loans.
- Event-triggered fees (extension, default, early repayment) price your risks.
- A fee added to the loan balance still costs you — and may attract interest.
How should you group short-term loan fees?
The names vary from lender to lender, but every fee falls into one of three groups. Sorting them this way makes quotes far easier to compare.
- Up-front fees — charged to set the loan up. Paid at settlement or added to the balance. Rarely refunded.
- Ongoing fees — charged during the loan, such as monthly account or line fees.
- Event-triggered fees — charged only if something happens: early payout, an extension, a missed payment, discharge at the end.
Up-front fees are certain. Event-triggered fees are the price of your risks. Both belong in your analysis.
What are the common up-front fees?
| Fee | What it covers | Notes |
|---|---|---|
| Establishment / application | Assessing and setting up the loan | Often the largest lender fee |
| Legal / documentation | Preparing the loan agreement and security documents | Higher for property-secured loans |
| Valuation | Independent valuation of the security property | Paid to the valuer, often before approval |
| Registration / title | Registering a mortgage or caveat, PPSR registrations | Government and search costs |
| Brokerage | Paid to a broker, if one is involved | Should be disclosed |
On a 3 or 6-month loan these fees are spread over very few months, which is why short loans can look expensive per month even when the total dollar cost is modest. The right comparison is still total dollars for the time you hold the money — see total cost of a business loan.
What ongoing fees might apply?
- Account-keeping or administration fees — a flat monthly amount.
- Line fees — on lines of credit, charged on the approved limit whether or not you use it.
- Undrawn or commitment fees — sometimes on facilities drawn in stages.
These are easy to overlook because each amount is small. Multiply by the number of months and add them to the total.
Which fees are triggered by events?
This group deserves the most attention, because it prices what happens when plans change.
Early repayment fee or minimum interest. Charged if you repay before a set point. Decides what finishing early saves — see business loan early repayment.
Extension or variation fee. Charged if you need more time. For short-term loans this is your plan B’s price tag; ask for it before signing.
Default fees and default interest. Charged if a payment is missed or the loan isn’t repaid on time. ASIC’s unfair contract terms guidance gives the example of a default fee that exceeds what’s needed to protect the lender — a reminder to read these clauses closely.
Dishonour fees. For direct debits that fail. Particularly relevant for daily or weekly repayment loans.
Discharge fee. Charged when the loan is repaid and security released.
If you’d like quotes with every fee itemised in dollars, start your enquiry here — it doesn’t involve a credit check.
Does it matter if a fee is added to the loan?
Yes. A capitalised fee isn’t free just because you didn’t pay it from your account. It’s added to what you owe, and on many loans it attracts interest for the whole term. When comparing quotes, count capitalised fees in full, plus any interest charged on them.
How do you compare fee structures across quotes?
Build a simple table for each quote:
| Quote A | Quote B | |
|---|---|---|
| Up-front fees (total $) | ||
| Ongoing fees × months | ||
| Time-based cost to likely exit month | ||
| Early repayment charge at that month | ||
| Discharge fee | ||
| Total at likely exit | ||
| Extension fee (if needed) |
The bottom line tells you which is cheaper if things go to plan. The extension row tells you which is cheaper if they don’t. The comparator tool handles the time-based part and draws both options month by month.
How are fees treated for tax?
The ATO includes bank fees and charges and interest on money borrowed for business among deductible operating expenses. Some borrowing costs may be claimed differently, depending on the fee and the loan. Keep the fee breakdown from your loan documents and give it to your accountant. Our tax deductibility guide covers the basics.
Illustrative: one quote, fees laid out
Illustrative figures only — not a quote. A 6-month property-secured loan might carry:
| Fee | Group | Amount | Refunded if repaid early? |
|---|---|---|---|
| Establishment | Up-front | $4,000 | No |
| Valuation | Up-front | $1,100 | No |
| Legal and documentation | Up-front | $1,800 | No |
| Title registration and searches | Up-front | $350 | No |
| Monthly account fee | Ongoing | $50 × months held | Stops at payout |
| Extension fee (if needed) | Event | $1,000 | — |
| Discharge | Event | $400 | — |
Up-front fees here total $7,250 — money spent before a single day of time-based cost. On a six-month loan that’s significant, which is why this site keeps insisting on total dollars for the months you’ll actually hold the money.
Fees on unsecured loans look different: no valuation or title costs, but often a larger establishment fee and sometimes dishonour fees on daily or weekly debits. The grouping still works — up-front, ongoing and event-triggered — and the same rule applies: get every fee as a dollar amount before comparing.
It’s also worth asking which fees are paid to the lender and which are passed through to third parties such as valuers, solicitors and registries. Third-party costs are hard to negotiate; lender fees sometimes have room to move.
See a fully itemised short-term option
Tell us what the loan is for and a lending specialist will walk you through each fee on the options that fit, in dollars. We don’t pull your credit file to have that conversation, and we don’t pass your enquiry around to lenders you’ve never heard of. Please be precise on the form about amount, security and timing — fees differ by structure, so accurate inputs give accurate figures.
Frequently asked questions
What is an establishment fee on a business loan?
It's a fee charged for setting up the loan, covering assessment and administration. It's usually paid at settlement or added to the loan, and is normally not refunded if you repay early.
Why do secured loans have valuation and legal fees?
The lender needs an independent valuation of the property and legal documents to register its mortgage or caveat. Those are real third-party costs, typically passed on to the borrower.
What is a line fee?
On a line of credit, a line fee is charged on the approved limit, whether or not you draw on it. It's the price of having the funds available.
Can I negotiate loan fees?
Sometimes. Third-party costs like valuations are hard to shift, but establishment and other lender fees may have some flexibility, especially for strong applications. Asking costs nothing.
Are loan fees tax deductible?
The ATO lists bank fees and charges among deductible business operating expenses. Some borrowing costs are treated differently, so ask your accountant how each fee on your loan should be claimed.