Which funding products does this apply to?

Business Line of Credit. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.

Are the figures here quotes?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What a particular lender charges is on that lender's page, where it publishes it at all.

The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.

How do I know a figure here is right?

Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.

Are the examples real deals?

No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.

Why do you never say what a typical rate is?

Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.

Is this financial or legal advice?

No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.

Can I reuse this content?

Quote a paragraph with a link back. Do not republish whole articles.

Unused-line, draw and annual fees on a business credit line

Unused-line fees, draw fees and annual fees on a business line of credit

The stated rate is charged on what you borrow. Three other charges are assessed on things that are not borrowing, and together they can move the real cost by several points.

By Find Me Funders research desk Updated 14 September 2026 1085 words 5 min read

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

A line of credit has a price that the rate does not describe, because the rate applies only to the balance outstanding and three common fees do not.

The unused-line fee(also called a commitment fee or non-use fee) is charged on the portion of the commitment you have not drawn, usually as an annual percentage assessed quarterly. The lender has set capital aside against a promise to lend; the fee pays for the promise. It is unusual on a business credit card and common on a committed revolving facility.

The draw feeis a flat amount or a percentage charged each time you take money down. Rare on bank lines, common on some non-bank digital lines, and the single easiest fee to underestimate, because its total depends on how often you draw rather than how much you borrow.

The annual or facility feeis a flat charge for having the line, payable whether you use it or not. Sometimes it appears once at origination instead, sometimes both.

Illustrative only — what they do together

Illustrative only — assume a $250,000 revolving line, an average outstanding balance of $60,000 across the year, a stated interest rate of 11% per year, an unused-line fee of 0.375% assessed on the average unused portion, a draw fee of 1% on each advance, six draws of $25,000 during the year, and a $500 annual fee. Every one of those inputs is chosen for the example.

Interest: 11% on $60,000 = $6,600.00
Unused-line fee: 0.375% on $190,000 = $712.50
Draw fees: 1% × $25,000 × 6 = $1,500.00
Annual fee: $500.00

Total cost for the year: $9,312.50 on average borrowings of $60,000. That is an effective 15.52% against a stated rate of 11%.

The stated rate was accurate. It was also less than three quarters of the story.

Now change one input. Draw twice instead of six times, holding each draw for three times as long so the average balance is unchanged: draw fees fall to $500 and the effective cost drops to about 13.85%. Nothing about the line changed except your behaviour.

Which fee bites in which situation

A large line you barely use.The unused-line fee dominates. A $500,000 commitment with a $20,000 average balance can cost more in non-use fees than in interest. Asking for a smaller commitment is a legitimate way to cut cost, and it is a conversation lenders have all the time.

Frequent small draws.Draw fees dominate. A 1% draw fee on money you hold for three weeks is an enormous annualised cost — 1% for 21 days is roughly 17% on an annual basis before any interest. If your pattern is many small draws, a facility with no draw fee at a higher stated rate may be cheaper.

A line held as insurance.Annual fee plus unused-line fee, with no interest at all. That is the price of the option, and it is a real price. Decide whether you want the insurance at that cost rather than discovering the cost on a statement.

Fees that are easy to miss entirely

Origination or facility set-up fee at closing, sometimes a percentage of the commitment rather than of anything you draw.
Renewal fee each time the line is re-underwritten, which on an annually renewed facility means every year.
Minimum interest or minimum monthly charge, which sets a floor regardless of usage.
Wire and ACH fees per advance. Small individually, and paid every draw. See wire fee.
Collateral monitoring, field examination and audit fees on asset-based facilities, charged whether or not anything is found. See field exam.
Termination or early-cancellation fee if you close the line before the end of its stated term. This one strands people who want to move banks.
Overadvance fees if the balance exceeds the borrowing base.
Late and NSF fees, and whether a late payment also trips a default rate.

How to compare two lines honestly

Do not compare rates. Model a year.

Write down your realistic usage: average balance, number of draws, size of each, and how many days each is outstanding.
Apply every fee in each offer's fee schedule to that usage.
Divide total annual cost by your average outstanding balance to get an effective cost.
Run it a second time with a heavier usage assumption and a third with a lighter one.

A line that wins on the light scenario often loses on the heavy one, and knowing which scenario you are actually in is more valuable than shaving half a point off a rate.

Ask for the fee schedule as a document

Not a summary, not a sentence in an email — the schedule. See fee schedule. Then ask two follow-up questions: on what base is the unused-line fee calculated (average daily unused, or commitment minus period-end balance, which can differ materially), and are any of these fees waived, reduced, or negotiable at a given deposit relationship or utilisation level.

What underwriting and pricing generally consider is the total relationship: deposits, treasury services, other borrowings. Fee waivers are one of the more negotiable parts of a credit facility, and policy on that varies widely by institution. Very few borrowers ask.

The base the unused-line fee is assessed on

The two common bases for an unused-line fee can differ by several times on the same facility, and the difference is invisible until the invoice arrives.

Illustrative only —a $250,000 commitment where you draw $200,000 for the last ten days of each quarter and carry nothing the rest of the year. Forty drawn days, 325 undrawn.

On an average-daily-unused basis, the unused portion averages $228,082, and at 0.375% that is $855.31 for the year.

On a commitment-minus-period-end-balance basis, the quarter-end balance is the $200,000 you have drawn, so the unused portion is measured at $50,000 and the fee is $187.50.

Same facility, same usage, $667.81 apart — and against average outstanding borrowings of $21,918 across the year, that gap alone is three percentage points of effective cost. Which basis applies is one line in the credit agreement, and it is worth reading before you agree the rate.

The lesson generalises. Any fee assessed on a snapshot rather than an average can be moved by when you borrow, and any fee assessed on an average cannot. Ask which one you have, then check whether your usage pattern happens to land on the wrong side of it.