A business loan is not just about the interest rate. Fees can add 10 to 20 percent to your total borrowing cost—or, with the right lender, they can actually reward you for being a reliable borrower. Knowing what to expect helps you budget accurately, compare options fairly, and choose a lender whose structure works for your situation.
Processing fees
Processing fees are one-time charges for loan origination—the administrative work of evaluating your application, preparing documentation, and setting up the facility.
The typical range in Singapore SME lending is 2 to 5 percent of the loan amount. On a $100,000 loan, that is $2,000 to $5,000 before you have received a single dollar of value from the financing.
When the fee is charged matters. Better lenders charge processing fees only on successful disbursement—you pay nothing if your application is rejected or you decide not to proceed. Others charge non-refundable application fees upfront, meaning you pay even if you never receive funds.
How the fee is collected also varies. Some lenders deduct the processing fee from your loan proceeds, meaning you receive less than the approved amount but repay the full principal. Others collect it separately. Neither is inherently better, but you need to understand which applies so you can budget appropriately.
The questions to ask: Is the fee refundable if I am rejected? Is it deducted from loan proceeds or paid separately? Are there any rebate programs for good payment behaviour?
That last question matters more than many borrowers realise. Some lenders, including Credezo, offer processing fee rebates—returning 50 percent of the fee to borrowers who maintain perfect payment records throughout the loan tenure. This transforms a sunk cost into a potential saving.
Late payment fees
Late payment fees exist to compensate lenders for the additional collection costs and increased risk when borrowers miss scheduled payments.
These fees typically work as a fixed amount per missed payment—often $100 to $200 per instalment—plus potential interest charged on arrears. The combination can escalate quickly.
Grace periods vary between lenders. Some offer five to seven days before late fees apply; others charge from day one. Understanding your lender's policy helps you manage tight months without unnecessary penalties.
The compounding effect is what catches many borrowers off guard. One missed payment triggers a late fee. If that payment remains outstanding, the next instalment may also be considered late. Interest accrues on arrears. What started as one difficult week can cascade into multiple fees that significantly increase your total cost.
The best protection is prevention: set up payment reminders, use autopay where available, and maintain a small buffer in your business account around payment dates.
Fees that might surprise you
Beyond processing and late fees, several less obvious charges appear in some loan agreements.
Early repayment penalties punish you for paying off your loan ahead of schedule. Some lenders impose lock-in periods during which early settlement is prohibited or heavily penalised. Others charge 1 to 3 percent of remaining principal. Before signing, ask explicitly: what happens if I want to settle this loan early?
Administrative fees cover various services: issuing statements, providing letters for third parties, or general account maintenance. Individually small, they accumulate over a loan tenure.
Legal documentation fees apply primarily to secured loans, where charges must be registered against property. These can add $1,000 to $3,000 depending on complexity. Unsecured loans typically avoid these costs.
Insurance requirements from some lenders mandate credit insurance or asset insurance as a condition of the facility. The premium becomes part of your borrowing cost even though it appears separate from the loan itself.
Dishonoured payment fees apply when your scheduled payment bounces due to insufficient funds. This typically triggers both a bank fee and a lender fee, compounding the cost of a cash flow shortfall.
For each of these, the question to ask is simple: does this fee apply to my loan, and under what circumstances?
The transparency test
Before committing to any facility, run this transparency test with your potential lender:
Can I see a complete breakdown of all fees that might apply to this loan? Are there any fees not listed in the main term sheet or Letter of Offer? What exactly happens if I pay early? What exactly happens if I pay late? Are there any incentives or rebates for good payment behaviour? Is insurance required as a condition of this facility?
A lender confident in their transparency will welcome these questions and provide clear, direct answers. Hesitation or vagueness signals that surprises may await you in the fine print.
Choosing transparent lenders
When evaluating lenders, look for structural signals of transparency.
All fees should be disclosed in the Letter of Offer before you commit. There should be a clear explanation of what triggers each fee. Rebate or reward programs for reliable borrowers indicate a partnership orientation rather than a penalty focus. No fees should apply for rejected applications—you should not pay for a loan you never received.
Credezo discloses all costs upfront in the Letter of Offer, with no hidden charges. The fee structure rewards good behaviour: borrowers who maintain perfect payment records receive 50 percent of their processing fee back at the end of the loan tenure. This alignment of incentives—where the lender benefits when you succeed—signals a different kind of relationship than lenders who profit primarily from penalties.
Key takeaway
Transparency protects both borrowers and lenders. When you understand exactly what you are paying and under what circumstances, you can make confident decisions and avoid costly surprises. Fees are a legitimate part of lending—but they should never be a trap.
If you want a clear breakdown of exactly what your financing will cost, apply with Credezo and receive a transparent Letter of Offer with no hidden charges.