Loan Origination Fee
Category: finance
An upfront fee charged by a commercial lender to cover the administrative costs of processing and underwriting a loan.
Typically expressed as a percentage of the total loan amount (e.g., 1% to 3%). On a one-million-dollar commercial facility, a 1% origination fee equals $10,000, which is usually deducted directly from the gross funding proceeds at closing.
Common Examples
- Reviewing the term sheet revealed a 2% loan origination fee that must be paid out of pocket during the transaction closing loops.
- Lenders utilize the loan origination fee to offset the legal and technical audit costs incurred during deep compliance checks.