What fees and charges should UK law firms expect from brokers and lenders?

Need finance for a law firm? Fees vary by product and provider — from one‑off arrangement fees and broker commissions to ongoing facility and monitoring charges, plus legal and valuation costs. This guide summarises common charges, typical ranges, practical examples and the precise questions solicitors should ask before accepting an offer. Ready to compare options? Get a Free Eligibility Check.

TL;DR — Quick summary

• Typical charges: arrangement/facility fees, interest, broker fees/commissions, commitment/monitoring fees, legal/valuation costs, invoice finance discount & funding fees, early repayment and default penalties.
• Typical ranges (indicative): arrangement 0.5%–3% or £250–£3,000; broker fees £250–£2,000 or 0.5%–2%; invoice discounting service 0.5%–3.5% + funding interest 0.5%–2%/month.
• Ask for a written full fee schedule, how fees are charged (upfront or deducted), and the total cost over the term.
• UK Business Loans can match your firm to brokers and lenders who specialise in law firms — Get a Free Eligibility Check.

Why solicitors need to understand finance fees

Law firms have distinct cashflow and regulatory sensitivities: timing of client settlements, disbursement funding, payroll, rent, and professional indemnity insurance premiums. Lenders will examine client money controls, trust account handling and AML procedures — and that extra due diligence can affect price and documentation.

Understanding the full cost of finance avoids surprises: a low headline rate can be offset by high arrangement fees, ongoing monitoring charges, or steep invoice finance discounts. Before you accept any offer, make sure you have a full, written breakdown of all charges and how they will be applied.

Get Quote Now — our quick enquiry connects you with lenders and brokers who understand legal sector funding and minimum facilities typically start from £10,000 upwards.

Fee categories you will commonly see

Below are the most common fees solicitors should expect. Each subsection explains the charge, typical ranges and the key “What to ask”.

Arrangement / facility fee

What it is: a one‑off fee for setting up the loan, overdraft or facility. It covers underwriting and documentation work.

How charged: fixed amounts (e.g. £250–£3,000) or a percentage of the facility (commonly 0.5%–3%). For small working‑capital facilities the fixed fee may dominate; for larger loans a percentage is more likely.

What to ask: “Is this deducted from the advance or payable up‑front? Can it be added to the facility? Are any discounts available?”

Interest rates and how they’re charged

Interest structure: fixed or variable (base rate + margin). Lenders quote headline rates but you should compare effective annual cost and how interest is calculated: daily, monthly or on a flat basis.

Examples: a term loan at 8% p.a. on £50,000 costs roughly £4,000 in interest per year before fees. Invoice finance uses a discount or service charge plus funding interest on amounts advanced — see the invoice finance section below.

What to ask: “Is the rate fixed for the term? How is interest calculated and charged? Are there scheduled review periods?”

Broker fees and commissions

Two common models:

• Commission paid by the lender to the broker — often disclosed to the applicant.
• Fees charged directly to the borrower — a fixed fee, percentage of the facility, or a success fee.

Ranges: borrower‑charged broker fees are typically £250–£2,000 or 0.5%–2% of the facility. Commission levels vary by product and lender.

What to ask: “Please provide a written breakdown: any fee I will pay, and whether you receive commission from the lender. Can any borrower fee be added to the loan?”

Commitment / facility maintenance fees

These are ongoing charges for unused facilities or annual administration. Examples include commitment fees on unutilised overdrafts (0.25%–1% p.a. on the unused amount) and annual monitoring fees (e.g. £250–£1,500).

What to ask: “Is there a commitment fee on unused lines? Are there annual renewal or monitoring charges and how are they calculated?”

Legal, valuation and security fees

Lenders may require legal charges over premises, company charges, property valuations and searches. Typically the borrower pays their own legal costs and may also be asked to cover the lender’s legal or valuation fees.

For law firms, expect additional queries and possibly higher due‑diligence costs around client account procedures and PII cover; this can add solicitor/legal fees or specialist consultancy costs.

What to ask: “Who pays the lender’s legal and valuation costs? Are these capped? Can we see an estimate in advance?”

Invoice finance / factoring fees

Invoice finance normally includes two main charges:

• Discount / service charge: a percentage of each invoice (typical range 0.5%–3.5% per invoice; specialist or smaller firms may see higher rates).
• Funding fee / interest: the cost for advancing funds against invoices — often expressed as a monthly rate (e.g. 0.5%–2% per month) or an annualised equivalent.

Recourse vs non‑recourse: non‑recourse transfers bad‑debt risk to the funder and carries higher fees. Confidential (non‑disclosed) factoring is usually more expensive than disclosed arrangements.

Example: invoice value £20,000; discount 2% = £400; advance 80% = £16,000 funded; funding charge 1.5% for two weeks (approx) = small additional cost — total cost depends on how long the invoice remains outstanding.

What to ask: “What is the discount rate, are there minimum monthly charges, and will the facility be disclosed to our clients?”

Early repayment, exit and refinancing fees

Term loans and asset finance often include early repayment charges (ERCs) calculated as a percentage or interest shortfall. Exit fees and administration charges may also apply on closure.

What to ask: “How is the ERC calculated? Is there a notice or cooling‑off period? Are there fixed exit fees?”

Penalty, late payment and default charges

Default interest, recovery costs and administration fees apply if payments are late or covenants breached. Default rates are significantly higher than the contractual rate and lenders define default triggers in the facility agreement.

What to ask: “What is the default interest rate, what steps are taken before default action, and are there cure periods?”

Regulatory, tax and compliance notes

Commercial borrowing by law firms is not a consumer credit product, but lenders will undertake AML checks and probe client money handling. VAT: most pure finance charges are outside VAT, but legal fees, valuations and some services may be VATable — check with your accountant.

Always ask for full written terms and consult your legal or tax adviser about the implications of security over client funds or trust-account arrangements.

How to compare offers — checklist for solicitors

Compare offers on total cost and operational impact, not just headline rate. Key checklist items:

• All‑in cost / APR or effective annual cost.
• Upfront fees vs fees added to facility.
• Ongoing monitoring, commitment and renewal fees.
• Security required, covenants and reporting burden.
• Funding speed, flexibility and minimum facility size (we handle £10,000+).
• Transparency of broker fees and disclosures.

Need help comparing multiple offers? Start a Free Eligibility Check and we’ll match you to brokers and lenders who specialise in legal sector funding.

Questions to ask brokers and lenders

• “Please provide a complete fee schedule in writing (arrangement, broker, legal, valuation, monitoring).”
• “Is any fee deducted from the advance or payable separately?”
• “Can broker fees be rolled into the facility?”
• “What are early repayment charges and default interest?”
• “Who pays legal and valuation costs and are they capped?”
• “Will the facility be disclosed to my clients (invoice finance)?”

Get Quote Now — provide a few details and receive clear, comparable options from lenders and brokers who understand law firms.

How UK Business Loans helps solicitors

We’re an introducer that connects law firms with specialist brokers and lenders. Tell us your needs via our short enquiry and we’ll match you to providers experienced in funding solicitors, whether you need short‑term bridging, invoice finance or working capital. Our service is free and there’s no obligation to proceed.

For a sector overview and to learn more about solicitor‑specific products, see our dedicated guidance on solicitors business loans.

Free Eligibility Check — Get Started

Example scenarios

1) Short‑term bridging for disbursements

Scenario: conveyancing firm requires £75,000 to cover disbursements awaiting settlement.

• Possible fees: arrangement fee 1% (£750), interest at 1.2% monthly, lender legal fee £500, monitoring fee £250.
• What to watch: ERC if you repay quickly, and whether the arrangement fee is deducted from the advance.

2) Invoice discounting for a small firm

Scenario: firm with steady billings wants invoice discounting on £100,000 ledger.

• Typical pricing: discount 2% on invoices, funding interest 1% per month on advanced amounts, minimum monthly fee £200.
• What to watch: whether facility is disclosed, recourse vs non‑recourse, and any cap on admin fees.

After reviewing options, always get the full written schedule of fees and a worked example for your expected volumes.

Frequently asked questions

Will making an enquiry affect my firm’s credit rating?

No. Submitting an enquiry through UK Business Loans does not affect your credit score. Lenders may perform credit checks only if you progress to a formal application.

Are broker commissions disclosed?

Brokers should disclose commissions and any borrower fees. If a broker is not transparent, request their written fee disclosure before proceeding.

Can I include arrangement or broker fees in the loan?

Sometimes. Some lenders will allow fees to be added to the facility (increasing interest cost), others require upfront payment. Confirm in writing.

Do VAT rules apply to lender/broker fees?

Pure finance charges are usually outside VAT, but legal, valuation or consultancy fees may be VATable. Check with your accountant.

How quickly will I receive quotes via UK Business Loans?

Typically within hours during business hours — depending on lender capacity and the complexity of the request.

Final summary & next steps

Know every fee before you sign: arrangement, interest, broker fees, commitment and legal costs can materially change the total cost of finance. Always ask for a written fee breakdown, worked examples and the full terms on early repayment and default. If you’d like tailored offers from lenders and brokers who understand law firms, complete our short form — Start your Free Eligibility Check and we’ll match you to the most relevant finance partners quickly and confidentially.

Ready to compare quotes? Get a Free Eligibility Check — it takes a couple of minutes and there’s no obligation.

1. Will submitting an enquiry through UK Business Loans affect my firm’s credit score?
No — submitting an enquiry is not a credit application and won’t affect your credit score; lenders only carry out credit checks if you progress to a formal application.

2. Is UK Business Loans a lender or does it provide financial advice?
We are not a lender and do not give financial advice; we’re a free introducer that matches UK businesses and solicitors with FCA‑regulated brokers and lenders.

3. What typical fees should solicitors expect when applying for a business loan?
Common charges include arrangement/facility fees (typically 0.5%–3% or £250–£3,000), broker fees (£250–£2,000 or 0.5%–2%), commitment/monitoring fees, legal and valuation costs, and invoice finance discounts/funding fees, all varying by product and provider.

4. Can I roll broker or arrangement fees into the loan facility?
Sometimes — some lenders will allow fees to be added to the facility (increasing interest costs) while others require up‑front payment, so always confirm in writing.

5. How much does invoice finance cost for a law firm and how is it charged?
Invoice finance normally charges a discount/service fee (roughly 0.5%–3.5% per invoice) plus funding interest (often 0.5%–2% per month), with non‑recourse, confidentiality and minimum monthly fees affecting the overall price.

6. What minimum loan or facility size do you handle for solicitors?
Our network typically handles facilities from around £10,000 upwards, with many lenders offering larger amounts depending on security and need.

7. How quickly will I receive quotes after starting a Free Eligibility Check?
You’ll usually receive responses within hours during business hours, though timing depends on lender capacity and the complexity of your enquiry.

8. Will lenders charge extra due diligence costs for law firms because of client accounts and AML checks?
Yes — lenders commonly undertake additional checks on trust account controls, AML and professional indemnity which can generate extra legal, valuation or admin costs for solicitors.

9. How should I compare business loan offers for my law firm?
Compare the all‑in cost (APR/effective annual cost), whether fees are upfront or rolled in, ongoing commitment and monitoring charges, required security and reporting burdens, and ask for worked examples and a full written fee schedule.

10. Are broker commissions and borrower fees always disclosed?
Reputable brokers and lenders should disclose commissions and any borrower fees in writing, and you should request a complete fee breakdown before proceeding.