Core terms
Borrow fee
The cost of borrowing shares to hold a short position, usually quoted as an annualized rate and charged daily while the position is open. It is separate from any locate fee.
A short seller borrows the shares it sells. The lender charges for that, and the rate depends on supply and demand for the stock. Easy-to-borrow large caps can cost a fraction of a percent a year; hard-to-borrow small caps can cost tens or hundreds of percent a year, and the rate can change from one day to the next.
An annualized rate turns into a daily charge. At 120% a year, holding a $10,000 short for one day costs about $10,000 × 120% ÷ 360 ≈ $33, before any locate fee (Illustrative; brokers use different day counts).
What traders should verify
Check the borrow rate before entering a short and again each day you hold it. On hard-to-borrow names the fee can matter more than commissions.
Do not conflate
Broker usage; rates, day counts and how fees are shown differ by broker. A high fee says shares are scarce, not which way the price will go.
Primary source
Trader usage: there is no official definition, and platforms and tools may calculate it differently.