commitment commission

commitment commission
England, Wales
commitment fee, Also known as commitment commission. A fee payable by the borrower to the lender under a loan agreement calculated by reference to the amount of the undrawn and uncancelled loan during the availability period. In a syndicated loan, it will be payable to each of the lenders via the agent.
The fee is designed to compensate the lender for capital adequacy requirements associated with lending.
Typically, the fee is calculated at a rate equal to roughly half the margin and is paid monthly or quarterly in arrears.
USA
Fee paid to lenders by borrowers for money that will be borrowed in the future on a specified date. In exchange for the fee, the lender commits to extending credit on the future date. A commitment fee is distinguished from interest.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.


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