Application fee: Overview, definition, and example
What is an application fee?
An application fee is a non-refundable charge that an individual or business must pay when submitting an application for a service, opportunity, or program. The fee is typically required to cover the administrative costs associated with reviewing, processing, and managing the application. Application fees are commonly found in various contexts, such as when applying for a job, university admission, government permits, housing, loans, or business licenses. These fees ensure that the application process is handled efficiently and help offset the costs involved in reviewing and evaluating applicants.
In simpler terms, an application fee is a one-time payment made when you apply for something, which helps cover the costs of processing your application.
Why is an application fee important?
An application fee is important because it helps organizations or businesses cover the costs of reviewing applications and managing the application process. It helps ensure that only serious applicants submit requests, as the fee can serve as a deterrent to those who are not committed to the process. For businesses or institutions, the application fee can support administrative costs, saving resources and time.
For SMB owners, implementing an application fee can help manage the volume of applications, encourage serious inquiries, and offset administrative costs. It also ensures that resources are allocated efficiently in the application review process.
Understanding an application fee through an example
Let’s say your company is offering a business loan program, and you require interested applicants to submit an application to be considered. In order to review the financial history and plans of each applicant, you charge a $50 application fee to cover the administrative costs of evaluating the requests. The fee helps your business manage the time and resources needed to process the loan applications.
In this case, the application fee ensures that you are compensated for the work involved in reviewing each loan request, allowing you to dedicate resources to properly evaluate each applicant.
Example of an application fee clause in a contract
Here’s an example of what an "application fee" clause might look like in an agreement or policy:
“The Applicant agrees to pay a non-refundable application fee of $[amount] upon submission of the application. This fee is required to cover the administrative costs associated with processing and evaluating the application. The fee is payable at the time of application submission and is not refundable under any circumstances.”
Conclusion
An application fee is a charge applied to individuals or businesses when submitting an application for a service, program, or opportunity. For SMB owners, implementing an application fee helps cover the costs of reviewing applications and ensures that the application process is efficient. By charging a reasonable application fee, businesses can better manage their resources, encourage serious applicants, and offset the costs associated with the application evaluation process.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.