Establishment fee
What is an establishment fee on a business loan?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
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An establishment fee is a one-off charge when a facility is set up, and often again when it is renewed or restructured, for the bank's work in assessing, approving and documenting it. It is usually a percentage of the limit or a fixed amount, taken at the first drawing. Because it is paid once it weighs most on a short facility, and it is often more negotiable than the margin — especially at a renewal, where the bank's work is smaller and the alternative is a refinance.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
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