The Fees That Sit on Top of the Rate
You pay more than interest on a business loan, and the extras decide the real cost your cash flow carries. Arrangement or completion fees, early-repayment charges, broker commission, and — on secured loans — valuation and legal fees all stack on top.
Read the APR first: it bakes in the compulsory fees, but the rest you have to hunt for.
You should get the full fee schedule in writing before you sign — we always do. On a small high-street loan the fees can be nil; on a secured deal they run into thousands, payable even if it falls through.
Arrangement and Completion Fees
You’ll often pay nothing upfront on a high-street loan. Barclays, NatWest, HSBC, and Lloyds all charge a £0 arrangement fee on their small business loans, so the rate is the cost.
You’ll pay an alternative lender a fee instead. Funding Circle adds a completion fee of 1-3% to your loan balance at drawdown, repaid over the term; a traditional arrangement fee elsewhere usually runs 0.5-2% of the amount.
A fee added to your balance earns interest too — so you pay for it twice.
Early Repayment Charges
You should check the early-repayment clause before you sign, because settling early should free up your cash flow, not cost you. iwoca, Funding Circle, Barclays, and NatWest charge nothing to clear a loan early.
HSBC is the exception: picture clearing your loan early after a strong quarter, only to have a month plus 28 days’ interest docked from the settlement. A regulated early-settlement charge is capped at up to 58 days’ interest.
Secured loans bite you harder. A commercial mortgage or large fixed loan often charges 1-5% of the balance to settle early, though most let you overpay 10% a year first.
Alternative-Lender and Merchant Cash Advance Fees
You’ll meet stacked fees with a merchant cash advance. Capify, for instance, adds a processing fee of £249-£649, a 4% origination fee, and a £24.90 monthly charge on top of the factor rate, before your cash flow feels the repayment.
You get no APR and no early-settlement saving on a factor rate. Advance £20,000 at 1.2 and you repay £24,000, fixed — clearing it fast just raises the effective rate.
With an advance, speed costs you; it never saves you.
Secured Loan Fees You Pay Even If It Falls Through
You pay third-party fees on a secured loan that you don’t get back. A RICS valuation and the solicitor’s legal work are yours to cover, and they fall due even if the loan never completes.
Picture a valuation coming in low after you’ve paid for it — the deal collapses, but the surveyor and solicitor still invoice you. Budget for those costs before you commit.
On a secured deal, you pay real fees before the loan is real.
Broker Fees and Commission
You should ask a broker exactly how they’re paid. Most are paid by the lender — usually 1-5% of the loan, built into your rate — but some charge you directly, often £500-£1,500.
Commission baked into the rate isn’t free; you carry it in every repayment. The FCA has banned discretionary commission, where a broker could inflate your rate to earn a bigger payout.
You should get the exact figure and how it affects your rate, in writing — we always do. A broker who won’t put their commission on paper is one to walk away from.
Default, Late-Payment, and Other Charges
You’ll trigger penalty fees if a repayment is missed — even the month a big supplier invoice and payroll land together. Lenders charge a flat late fee or a penalty rate on the overdue amount, and persistent misses bring collection costs.
A revolving facility can charge for money you don’t use. Some lenders levy a non-utilisation fee — 0.6-2% a year — on the undrawn part of your limit, to cover reserving the capital.
A missed payment costs more than the fee: it also marks your credit file.
How to Keep the Fees Down
You can cut the fees more than the rate. Favour a lender with no arrangement or early-repayment fee, settle early where it’s free, and read any completion fee into the total before you compare.
Avoid paying a broker upfront in cash. A legitimate broker is paid by the lender or bills you transparently — an upfront cash demand to “release” a loan is a fraud marker, not a fee.
A Start Up Loan charges no fees at all — no arrangement, no early-repayment — at a fixed 7.5%. We send eligible founders there before the fee-heavy alternatives.
Business Loan Fee FAQs
What fees does a business loan have besides interest?
The common ones are an arrangement or completion fee (0.5-2% generally; Funding Circle 1-3%; high-street banks £0 on small loans), an early-repayment charge (HSBC deducts a month plus 28 days’ interest, though many lenders charge nothing), and broker commission. Secured loans add a RICS valuation and legal fees, and merchant cash advances stack processing, origination, and monthly admin fees on top of the factor rate. The APR already includes compulsory fees, so it is the fairest comparison once you have it.
Do high-street banks charge an arrangement fee?
Not on their small business loans. Barclays, NatWest, HSBC, and Lloyds all charge a £0 arrangement fee on their core small-business lending in 2026, so the interest rate is effectively the cost. Alternative lenders are different: Funding Circle, for example, charges a completion fee of 1-3%, added to your loan balance at drawdown and repaid over the term rather than deducted from the advance.
Will I be charged for repaying a business loan early?
It depends on the lender. iwoca, Funding Circle, Barclays, and NatWest let you settle early with no charge, so clearing the balance saves you the remaining interest. HSBC deducts one month plus 28 days’ interest. Secured loans and commercial mortgages are stricter, typically charging 1-5% of the outstanding balance, though most allow you to overpay 10% a year before the penalty applies.
How is a finance broker paid?
Usually by the lender — a commission of roughly 1-5% of the loan, built into the rate you’re quoted — or directly by you, often £500-£1,500. The FCA has banned discretionary commission arrangements, where a broker could inflate your rate to earn more. Ask any broker for the exact commission and how it affects your rate, in writing, and never pay an upfront cash fee to “release” a loan — that’s a fraud marker.
What fees does a merchant cash advance have?
A merchant cash advance is priced with a factor rate rather than an APR: advance £20,000 at a factor of 1.2 and you repay £24,000, fixed, with no saving for repaying early. On top of that, providers such as Capify commonly add a processing fee (£249-£649), an origination fee (4%), and a monthly service fee (£24.90). Those layers can push the effective annual cost well above 50%, which is why you should compare the total repayable.
How we put this guide together
What we covered. This guide sets out the fees on a UK business loan in 2026, drawing on lender fee pages, the Consumer Credit (Early Settlement) Regulations, FCA rules on commission, and British Business Bank scheme terms. We do not rely on comparison-site summaries or aggregator data.
Data sources. Fees were checked against primary sources in June 2026 — Barclays, NatWest, HSBC and Lloyds business-loan pages, Funding Circle, iwoca and Capify, and the British Business Bank.
How we handle conflicts. Where sources disagreed, such as the Funding Circle completion fee, we verified the figure against the lender and the maintained provider data (1-3%, added to the balance) rather than repeat a higher unverified band.
Update cadence. We re-verify this page at least monthly, and whenever a lender changes its fees. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This page is editorial content, not regulated financial advice. Credit products are subject to status and approval, and most business lending sits outside the FCA consumer-credit perimeter. Compare offers directly with providers before you apply.