Glossary
Establishment fee
A one-off fee charged when a facility is set up, usually a percentage of the amount borrowed.
In plain English
The establishment fee covers the lender's cost of assessing and documenting a facility. On commercial lending it commonly runs from a fraction of a percent up to around 1% of the facility, and it is usually capitalised into the loan rather than paid separately.
It sits alongside the other set-up costs: valuation, legal, and any broker fee where one applies.
Why a lender cares
Capitalising the fee means you borrow it and pay interest on it for the life of the facility, so a $10,000 fee on a ten-year term costs more than $10,000. It belongs in the sources and uses table at the front of any funding submission, and a lender will notice if it is missing.
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