Also called: Facility fee
Line fee
A line fee is a charge calculated on the total approved limit of a facility rather than the amount drawn, usually expressed as an annual percentage and billed monthly. It is common on overdrafts, lines of credit and invoice finance facilities.
What is a line fee?
A line fee is a charge calculated on the total approved limit of a facility rather than the amount drawn, usually expressed as an annual percentage and billed monthly. It is common on overdrafts, lines of credit and invoice finance facilities.
Example
A 1.5% line fee on a $500,000 limit costs $7,500 a year whether or not the limit is fully drawn.
Why it matters
It is the cost of having the facility available, so an oversized limit can be expensive to keep on standby.
Where you will see it
Business line of credit, Business overdraft, Invoice finance