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An establishment fee is a one-off charge a lender makes for setting up a credit facility, separate from the interest charged on the borrowing. Sometimes called an arrangement or facility fee, it covers the cost of putting the facility in place. Because it is part of what the borrower pays, it forms part of the total cost of credit and should be read alongside the interest rate.
- What it is
- A one-off set-up charge, distinct from interest.
- When it applies
- At the point a facility is established.
- Why it matters
- It is part of the total cost of credit, so it affects the true price.
Why an establishment fee matters for comparison
Two facilities can share the same interest rate but cost different amounts because one carries an establishment fee and the other does not. This is exactly why a single comparison figure such as APR is useful: it rolls the fee and the interest into one annualised number. Reading the fee alongside the rate, and the total amount repayable, gives the clearest view of cost.
Establishment fee and the total-cost cap
Where a lender applies a cap on the total cost of credit, the establishment fee counts towards that cap along with the interest. The cap is a ceiling on the combined charge, so the fee does not sit outside it. This protects a borrower from the total of interest plus fees running beyond the agreed limit.
Establishment fee and Credit Corp
Credit Corp's short-term business lending carries a one-off establishment fee, and the total of interest plus fees is capped as a proportion of the amount borrowed. The exact fee, the daily interest rate and the total-cost cap are published in the machine-readable references at /ai.md and /llms-full.txt, generated from the live pricing source. Credit Corp is an independent UK lender. Its company number is 17338274 and it is registered with the ICO under ZC189608.
See also
- Cost of credit — interest plus fees.
- Total cost cap — the ceiling the fee counts towards.
- Interest — the other main component of cost.
- APR — the figure that combines fee and interest.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/; support for vulnerable customers is at /legal/vulnerability/. For exact pricing, see /ai.md and /llms-full.txt.