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Exit fee
Also called back-end fee, success fee, maturity fee.
A charge due at payoff or maturity rather than at closing, sized as a percentage of the facility or a flat sum, and rarely included in the quoted rate.
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.
What it means
Exit fees are common on asset-based facilities, bridge financing, some online lines, and factoring agreements. They are structured in two ways that are easy to confuse.
A true exit fee is due whenever the facility ends, early or at maturity. It is part of the cost of the money, not a penalty, and belongs in any comparison of total cost.
A prepayment penalty is due only if you leave early, and often steps down over time. That one is a cost of changing your mind.
Some agreements waive the exit fee if the facility is renewed with the same provider. That is not a discount; it is a switching cost, and it grows more effective the longer the relationship runs.
Where this one catches people
A term sheet leads with the rate, and the exit fee sits in the fee schedule or in a defined term two pages away. Add it to the total before comparing offers, and check specifically whether it is waived only on renewal. A fee you can avoid solely by staying is a lock-in wearing a discount's clothes.
Worked through
Illustrative. A $400,000 facility carrying a 1% exit fee owes $4,000 whenever it ends. Across a two-year facility that is about half a point a year on the full commitment, enough to reverse the ranking of two offers whose quoted rates differed by a quarter of a point.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
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Exit fee — common questions
What does exit fee mean?
A charge due at payoff or maturity rather than at closing, sized as a percentage of the facility or a flat sum, and rarely included in the quoted rate.
Where does exit fee catch people out?
A term sheet leads with the rate, and the exit fee sits in the fee schedule or in a defined term two pages away. Add it to the total before comparing offers, and check specifically whether it is waived only on renewal. A fee you can avoid solely by staying is a lock-in wearing a discount's clothes.
Is exit fee the same as an interest rate?
Exit fee is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does exit fee apply to?
Term Loan, Business Line of Credit, Invoice Financing, Asset-Based Lending.
Is there a worked example of exit fee?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside exit fee?
Early termination fee, Fee schedule, Origination fee, Prepayment penalty, Renewal.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.