How Much Does a Business Loan Secured by Real Estate Cost? The Full Breakdown
Businesses asking about a loan secured by real estate usually start with one question: "what's the interest rate?" That's understandable, but incomplete, because the interest rate alone is only part of the cost of financing. To get the full picture, you also need the arrangement fee, the cost of the appraisal report, notary and court fees for registering the mortgage, and any additional costs. In this article we break the cost of a loan secured by real estate down into its parts and show, with a concrete example, what a business borrowing PLN 500,000 for 12 months really pays.
Why the interest rate isn't the whole cost
With a bank loan, customers are used to a single figure: RRSO, Poland's real annual percentage rate (APR), which shows the full cost of the obligation up front. For non-bank business financing, that requirement formally doesn't apply, because consumer credit rules cover individuals borrowing for private purposes, not businesses financing commercial activity. That doesn't mean the cost is opaque, though, it just means you have to add it up yourself from a few components.
The full cost of a business loan secured by real estate usually has five parts:
- The nominal interest rate, the interest charged on the loan amount over the whole financing period
- The arrangement fee, a one-off charge taken at the start
- The cost of the appraisal report, the property valuation carried out by a licensed appraiser
- Notary and court fees for the notarial deed and registering the mortgage in the land and mortgage register
- Any additional costs, for example assigning the property insurance
Below we go through each of these separately, with realistic amounts.
The nominal interest rate: what it depends on and how much it is
The interest rate on a business loan secured by real estate usually falls in the 8-18% a year range. That's a much wider range than a bank loan, because private lenders price the risk of each case individually instead of applying one fixed rate card.
Three factors decide where a given offer lands within that range:
- LTV (Loan-to-Value): the lower the ratio of the loan amount to the property's value, the lower the risk for the lender, and the lower the margin. We cover this mechanism in detail in our article on how LTV affects the terms of a loan secured by real estate. In short: at an LTV under 40%, the interest rate tends to be lowest, at an LTV closer to 65-70% it's usually highest.
- Type of collateral: an apartment in a large city is a highly liquid form of collateral, so the interest rate is lower than for farmland or commercial property, which is harder to sell quickly if enforcement becomes necessary.
- The business's risk profile and the purpose of the financing: a short loan term, a clear purpose (e.g. bridge financing until another property sells) and a good track record with the lender can lower the margin by a few percentage points.
The arrangement fee
The arrangement fee is a one-off charge the lender takes when the financing is disbursed, usually in the 1-4% of the loan amount range. In practice it's either deducted from the amount paid out (the business receives the loan minus the fee) or added to the repayment balance, depending on how the agreement is structured.
The size of the fee depends on several factors: the loan amount (percentage-wise, the fee tends to be lower on larger amounts), the financing period, the risk assessment, and how much work the case requires on the lender's side, for example a complicated legal status for the property means more analysis, which can push the fee up. It's always worth asking about the arrangement fee at the first conversation, not only when signing the contract.
The cost of the appraisal report
The appraisal report, the official property valuation prepared by a licensed appraiser, is the basis for calculating the LTV and the maximum loan amount. You can read more about how the whole valuation process works in our article on how a property is valued. The cost of the report itself depends on the type of property:
- An apartment or single-family house: PLN 500-1,500
- Building land or farmland: PLN 800-1,800
- Commercial property, a warehouse, an industrial hall: PLN 800-3,000, and even more for large or unusual properties
This is a one-off cost, regardless of whether the loan ultimately goes through. The report is usually valid for 12 months, so it can be reused for several applications in that period if a business is comparing offers from more than one lender.
Notary and court fees
Setting up a mortgage requires a notarial deed and an entry in the land and mortgage register, which involves two separate categories of cost: the notary's fee (the charge for the notary's service) and the court fee for registering the mortgage.
The court fee for registering a mortgage in the land and mortgage register is fixed at PLN 200, regardless of the loan amount. The notary's fee, on the other hand, depends on the value of the secured claim and rises on a sliding scale with the amount, under the regulation on maximum notary fee rates.
| Loan amount (mortgage value) | Approximate notary fee (max.) | Court fee for the land register entry |
|---|---|---|
| up to PLN 100,000 | approx. PLN 1,000-1,500 | PLN 200 |
| PLN 100,001-500,000 | approx. PLN 1,500-2,500 | PLN 200 |
| PLN 500,001-1,000,000 | approx. PLN 2,500-3,500 | PLN 200 |
| above PLN 1,000,000 | case by case, usually 0.2-0.3% of the amount above PLN 1 million | PLN 200 |
In practice, for a typical business loan in the PLN 200,000-700,000 range, the combined cost of the notary and the court (the notary fee, copies of the deed, VAT on the notary fee, the court fee) usually falls within PLN 1,500-3,000. Notaries are allowed to discount the maximum rates, so it's worth asking a few offices for a quote, the differences can be noticeable.
Possible additional costs
Beyond the four main components, some situations bring additional costs worth knowing about in advance:
- Assignment of the property insurance policy: the lender usually requires the property to be insured against fire and other events for the whole loan period, with the rights under the policy assigned to them. The insurance itself typically costs a few hundred zloty a year, the assignment itself usually doesn't generate an extra charge beyond a possible small administrative fee from the insurer.
- Early repayment fee: not every contract includes one, but some lenders reserve compensation for closing the loan early, especially in the first few months of the financing period. It's worth checking this clause in the contract before signing, especially if the business plans to repay early, for example after selling another property.
- Broker's fee: PozaBankiem acts as an independent financial broker, connecting businesses with private investors and private debt funds that provide the financing. The initial assessment of your application and the consultation are free, and the financing terms, including any broker's fee, are always presented to the client transparently in the offer, before any agreement is signed.
Worked example: a PLN 500,000 loan over 12 months
Below is a numerical example showing how the individual components add up to the total cost. Assumptions: loan amount PLN 500,000, property value PLN 1,111,000 (LTV = 45%), term 12 months, collateral: an apartment in a large city owned by the company.
| Cost component | Assumption | Amount |
|---|---|---|
| Interest | 11% a year on PLN 500,000, 12 months | PLN 55,000 |
| Arrangement fee | 2.5% of the loan amount | PLN 12,500 |
| Appraisal report | Apartment, one-off | PLN 1,200 |
| Notary fee plus copies | Mortgage amount PLN 500,000 | PLN 2,000 |
| Court fee for the register entry | Fixed rate | PLN 200 |
| Total cost of the loan | Sum of all components | PLN 70,900 |
The business borrows PLN 500,000 and, after 12 months, repays the PLN 500,000 principal plus PLN 70,900 in total financing cost. Converted into a yearly figure in the spirit of an RRSO calculation, the total cost of this loan works out to about 14.2% of the borrowed amount per year (PLN 70,900 / PLN 500,000 x 100%). It's worth noting that the arrangement fee and one-off costs alone (the appraisal report, notary, court) add up to almost PLN 16,000, more than a fifth of the total cost, which is why leaving them out when comparing offers leads to the wrong conclusions.
How to compare offers by cost
Since there's no formal requirement to quote an RRSO figure for business loans, the responsibility for comparing offers falls on the business owner. A few rules that make an honest comparison easier:
- Ask for one number, not five. Every lender should be able to state the total amount to be repaid at the end of the financing period, including interest, the arrangement fee and one-off charges. If they don't, or give you an evasive answer, work out the cost yourself, the way we did in the example above.
- Compare offers for the same term and the same amount. A 9% rate over 24 months and a 12% rate over 6 months aren't directly comparable without converting them into an absolute cost figure.
- Check whether the fee is calculated on the loan amount or on something else. Sometimes the fee is calculated on the property's value rather than the loan amount, which significantly raises the real cost per borrowed zloty at a lower LTV.
- Ask directly about extra costs: an early repayment fee, the cost of amendments, a fee for reminders or notices. A trustworthy lender will answer straight away, without hesitation.
Warning signs worth watching for: a lender who only quotes the interest rate and avoids the topic of the arrangement fee, who pushes you to sign quickly without time to read the contract, who won't put the costs in writing before a meeting, or who tells you "we'll sort that out in person." A business that compares several offers based on total cost, rather than the headline interest rate alone, regularly finds differences of several percentage points a year.
What's next
Knowing the cost structure is the first step, the second is checking how long the whole process really takes from first contact to disbursement, which we cover in detail in our article on how long a non-bank loan takes. If you want to find out the approximate cost of financing for your specific property and amount, the fastest way is a free, no-obligation conversation, where we'll give you a full cost breakdown right away, not just the interest rate.
Frequently asked questions
The total cost of a business loan secured by real estate has several components: the nominal interest rate (usually 8-18% a year, depending on LTV and risk profile), a one-off arrangement fee (1-4% of the loan amount), the cost of the appraisal report (PLN 500-3,000, depending on the type of property), and notary and court fees (usually PLN 1,000-3,000). For a loan of PLN 500,000 over 12 months, the total cost is typically PLN 60,000-100,000, or roughly 12-20% of the loan amount per year. The exact figure depends on the LTV, the type of collateral and the length of the financing period.
Yes, the arrangement fee is one of the parts of the offer that's most often negotiable, especially for larger loan amounts (above PLN 300,000-500,000) or when the LTV is clearly lower than the maximum the lender accepts. The fee usually falls within a 1-4% range of the loan amount, and its exact level depends on the risk assessment, the length of the financing period, and competition between lenders. It's worth asking for several offers and comparing not just the interest rate but also the arrangement fee, since that's the element most often glossed over in the first conversation.
In most cases, the borrower covers the cost of the appraisal report, regardless of whether the loan is ultimately granted. It's a one-off expense of roughly PLN 500-1,500 for a residential property and PLN 800-3,000 or more for commercial property, land, or a warehouse. Some lenders cover the valuation cost themselves, or credit it toward the arrangement fee if the loan goes through, so it's always worth asking about this before commissioning the report, not after you've received it.
RRSO (Rzeczywista Roczna Stopa Oprocentowania, Poland's real annual percentage rate) is a figure legally required above all for consumer credit, under the consumer credit act, which does not cover financing granted to businesses for commercial purposes. Even so, the underlying logic of RRSO, converting every cost of a loan into a single annual percentage figure, is very useful when comparing offers for business loans secured by real estate. It's worth asking the lender to work out the total annual cost of the loan even if they're not formally required to disclose an RRSO figure.
Ask the lender for a written breakdown of every cost: the interest rate, the arrangement fee, valuation fees, notary costs, and any additional charges, for example for early repayment. A warning sign is a lender who only quotes the interest rate and avoids talking about the arrangement fee or extra charges, or who pushes you to sign quickly without time to read the contract. A trustworthy lender will present the full amount to be repaid and a schedule at the offer stage, not only on the day you sign.
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