What is a facility fee, and when is it charged?

2 min read

For availabilityNot just for drawing

Common on revolvingLines you dip into

One-off or annualDepends on the product

Separate from interestIts own line item

What the fee pays for

A facility fee covers the lender's cost of setting up and keeping a line of credit open for you. On a revolving credit facility or overdraft-style product, you are paying for the right to draw funds when you need them — so the fee can apply even in a month you draw nothing. It reflects that the lender has committed capital to stand behind your limit.

Facility fee vs arrangement fee

The two are easy to confuse. An arrangement fee is a one-off charge for setting up a specific loan, usually a percentage of the amount borrowed, paid at drawdown. A facility fee is more often tied to keeping a line available and may recur — annually, for example, on a renewing facility. Some products have both; some fold one into the other. Always ask which you are being charged.

Working it into the true cost

Because a facility fee can apply whether or not you draw, it changes the economics of a revolving line. If you expect to use the facility heavily, the fee is spread thin. If you are paying to keep a rarely-used line open 'just in case', the fee may make a committed facility poor value against simply applying when you need funds. Factor the fee into total cost before deciding.

See our full breakdown of fees to expect, and model the all-in cost on the true cost calculator. When a facility fits, explore a revolving facility.

Frequently asked questions

Do I pay a facility fee if I never draw the money?

Often, yes — that is the point of a facility fee. You are paying for the availability of the line, not for usage. On some products the fee is waived or reduced if the facility is left undrawn, so check the terms. If you are unlikely to use a line regularly, a committed facility with a standing fee may cost more than applying for funds only when you need them.

Is a facility fee negotiable?

Sometimes. Like most charges it reflects the lender's cost and appetite for your business, so a strong applicant or a competing quote can support a request to reduce or waive it. It is always worth asking for the fee to be itemised and for a total-cost figure that includes it, so you can compare offers fairly.