> It sounds to me like additional 5% interest, isn't it?

Interest accrues as a function of time. Yes, one could model this fee as an interest rate by taking into account the loan's expected term. But the 5% is not compensation for the time value of money or risk of lending–it is a facilitation payment. As such, calling it a fee seems acceptable.

Since the 5% doesn't change with the amount lent, or other factors, "flat" seems an appropriate adjective (though it is more commonly used to refer to a fixed dollar, versus percentage, amount).

EDIT: since the "fee" does appear to vary with a loan's term, yes, I think this would be correctly characterizable as interest.