Borrow Fee¶
OVERVIEW¶
A borrow fee — also called the cost-to-borrow rate, stock loan rate, or short-borrow rate — is the annualized interest a short seller pays to the lender of the shares for each day the position stays open. It is quoted as a percentage per year, accrues daily, and is the single largest carrying cost for a short position outside of dividend reimbursements. When a stock is "easy to borrow," the fee is typically below 1% per year. When a name is hard-to-borrow, fees can run from a few percent into the triple digits.
Note
Borrow fees are quoted as a percentage per year, accrue daily, and represent the single largest carrying cost for a short position outside of dividend reimbursements.
| Borrow Status | Typical Annual Fee |
|---|---|
| Easy to borrow | Below 1% |
| Moderate | 1% – 20% |
| Hard to borrow | 20% – 100%+ |
| Squeeze-grade | 100% – 300%+ |
HOW IT IS CALCULATED¶
Borrow fees are set by the prime broker or stock-loan desk based on real-time supply and demand for shares in the lending market. The daily charge on a short position is:
| Formula | Expression |
|---|---|
| Daily borrow cost | Position value × (Borrow fee % ÷ 360) |
| Annual borrow cost | Position value × Borrow fee % |
Most U.S. desks use a 360-day year for accrual, mark the position to market each evening, and bill in arrears. Tapeboard's borrow fee data reflects publicly published stock-loan availability — daily rebate rates, available-to-short share counts, and the implied annualized fee for every U.S.-listed name in inventory.
WORKED EXAMPLE¶
Shorting $100,000 of a stock with a 10% per-year borrow fee carries roughly $10,000 of fee over a full year, or about $27.78 per day ($100,000 × 0.10 / 360). At a 50% fee — where GME borrow rates briefly traded in late January 2021 according to S3 Partners and IBKR snapshots — the same $100,000 short bleeds about $138.89 per day. Squeeze-grade names go further: RAYA printed an IBKR borrow fee near 286% per year in early 2026, meaning a $100,000 short cost roughly $794 per day in carry alone, before any adverse price movement. For context, mega-caps like AAPL and MSFT typically run at 0.25–0.30% borrow — about $0.69 per day on the same notional.
| Borrow Fee | Daily Cost | Annual Cost | Reference |
|---|---|---|---|
| 0.25% (AAPL / MSFT) | ~$0.69 | ~$250 | Typical mega-cap |
| 10% | ~$27.78 | ~$10,000 | Elevated name |
| 50% (GME) | ~$138.89 | ~$50,000 | Late Jan 2021 — S3 Partners / IBKR |
| 286% (RAYA) | ~$794.44 | ~$286,000 | Early 2026 — IBKR snapshot |
WHEN TRADERS USE IT¶
Short sellers screen borrow fees before entering a position to estimate whether expected downside justifies carry. Fees above ~20% per year usually indicate borrow scarcity and crowded positioning, both of which raise squeeze probability — Tapeboard's short squeeze leaderboard weights borrow fee as one input into its composite Short Squeeze Score. Risk desks monitor sudden fee spikes as an early warning of recall risk, since lenders raising rates often presages forced buy-ins. Long holders of hard-to-borrow names sometimes earn rebate income by lending shares through their broker's fully-paid lending program. For how persistent extreme fees can get, see our data study: we analyzed 30 days of borrow fees — five names never left triple digits.
Tip
At borrow fees above ~20% per year, carry costs alone can erode a short thesis quickly. Screen fees before entry to confirm expected downside justifies the daily bleed.
LIMITATIONS AND COMMON MISCONCEPTIONS¶
Data Source Scope
IBKR is a single venue. Goldman Sachs, Morgan Stanley, JPMorgan, and the rest of the prime-broker complex run their own stock-loan desks with separate inventory and rate sheets — a hedge fund clearing at Goldman may pay materially different fees than the IBKR retail rate, sometimes lower (better wholesale access) and sometimes higher (smaller pools). Borrow fees update once per trading day in most public feeds, so the rate displayed at 11:00 AM ET reflects yesterday's close — intraday demand surges in fast-moving squeezes are not captured until the following morning's file. Quoted fees are also gross of any rebate; in reality short proceeds earn a rebate close to the fed funds rate, and the "fee" is the spread between the loan rate and that rebate. Finally, a high borrow fee alone is not a trade signal — many high-fee names are high-fee because the company is failing, and the short thesis is correct.
| Misconception | Reality |
|---|---|
| The displayed rate is live | Rates update once per trading day; intraday surges are not reflected until the next morning |
| One fee applies across all brokers | Each prime broker runs its own desk — rates vary by counterparty and account size |
| Quoted fee is the true net cost | Quoted fees are gross; short proceeds earn a rebate near the fed funds rate, and the effective fee is the spread |
| High borrow fee = trade signal | High fees often reflect a failing company where the short thesis is correct, not a squeeze setup |