Facility Fee

Facility Fee is a common bank charge in international trade finance, referring to the fee charged by a bank for providing a customer with a certain credit facility (such as L/C facility, loan facility, overdraft facility, etc.). It is usually charged periodically at a certain percentage of the total facility amount (e.g., 0.25%-1% per annum), regardless of whether the customer actually uses the facility. Usage scenarios include: exporters obtaining revolving L/C facilities, importers opening L/C facilities, enterprises obtaining standby credit facilities, etc. Notes: This fee overlaps with Commitment Fee but has a different focus—Commitment Fee is usually charged on the unused portion, while Facility Fee may be charged on the entire facility; unlike interest, Facility Fee is a payment for 'facility availability' rather than the cost of fund occupation. Trade practitioners should specify in the contract the calculation basis, rate, payment cycle, and whether it is refundable, to avoid confusion with Arrangement Fee, Agency Fee, etc. Proper use of Facility Fee can help enterprises lock in funding sources, but it is necessary to weigh costs against fund usage efficiency.