Typically, a lender charges a flat fee or a percentage of the undisbursed or future loan amount. The percentage fee generally varies between 0.25% and 1%. The fee is usually paid after the credit agreement's been finalized. However, the amount can be charged periodically if it is charged on the undistributed loan.
Commitment fees in India typically range from 0.25% to 2% of the unutilized portion of the loan or credit facility. The exact rate depends on factors such as the borrower's creditworthiness, loan amount, tenure, and market conditions.
A fee paid by a borrower on the unused portion of its revolving credit loans or delayed-draw term loans to compensate the lenders for their commitment to make the funds available to the borrower for a certain period of time.
For an open line of credit, a formula is used to calculate the average available amount of credit on a periodic basis, often quarterly. The fee is then calculated by multiplying the average unused commitment by the agreed-upon commitment fee rate and again by the number of days in the reference period.
Unlike an upfront fee, a commitment fee is a yearly fee. One can calculate this fee by multiplying the unused portion of a credit line by the commitment rate.
Commitment Percentage means, as to any Lender, the percentage of the Total Commitment obtained by dividing such Lender's Commitment by the Total Commitment. Sample 1Sample 2Sample 3. Based on 96 documents.
Generally, the standard commitment fee typically ranges between a 0.25% to 1.0% annual fee paid to the lender. While an insignificant source of returns, commitment fees are still charged by lenders to keep the line of credit available to be drawn upon on an “as-needed” basis.
A minimum purchase commitment, also referred to as a minimum quantities requirement, requires a buyer to a sales agreement to purchase a designated quantity of goods over a specified period of time (such as one year).
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.
Commitment Fees are charged by lenders to borrowers for the guarantee that a certain amount of credit will be available to them in the future. The borrower pays this fee upfront to secure the lender's commitment to fund a loan or line of credit.
Related Definitions
Commitment Amount means the aggregate amount of up to Ten Million Dollars ($10,000,000) which the Investor has agreed to provide to the Company in order to purchase the Company's Common Stock pursuant to the terms and conditions of this Agreement.
Definition of Monthly Minimum Fees
A monthly minimum fee is a charge that payment processors impose on merchants who accept credit cards if their total transaction fees in a given month do not reach a specified threshold. This fee is part of the payments contract between the merchant and the payment processor.
Reasonable fees means transaction, rental, or other periodic charges which are directly related to the cost of furnishing a particular service, and which are proportionate to actual usage of the service by all persons using the service competing in the same market area and may include a return on invested capital and ...
Minimum Commitment refers to an obligation within a contract that mandates one party to engage in or fulfill a certain level of activity or purchase a minimum quantity or value of goods or services over a specified period.
What does Commitment fee mean? A fee charged by a lender or a borrower for the undrawn portion of a committed loan facility, which is typically paid quarterly in arrears.
the doctrine of "reasonable expectations," which requires that insurance contracts provide the coverage that the insured could reasonably expect upon reading the policy.
The Zone of Possible Agreement (ZOPA) is where the interests of both parties align. It's within the bargaining range and represents the area where a deal can be made. If there's no overlap between the buyer's maximum price and the seller's minimum price, there's no ZOPA—and no deal can happen.
Offer and Acceptance
The most basic rule of contract law is that a legal contract exists when one party makes an offer and the other party accepts it.
A fee paid by a borrower on the unused portion of its revolving credit loans or delayed-draw term loans to compensate the lenders for their commitment to make the funds available to the borrower for a certain period of time.
A fee imposed to compensate for lag time, effectively requiring the paying of interest on the cash portion of a deal during a certain commitment period, triggered by various conditions (often regulatory approval) and generally running until the deal's closing.
An upfront fee is a common fee charged by lenders when you apply for a loan. It might also be called an 'application' fee or 'establishment' fee. An upfront fee covers the costs of processing your application, including things like administrative costs, credit assessment, loan set-up and document preparation.
Commitment rates are the rates at which mortgage loans can be sold to another entity, such as Fannie Mae and Freddie Mac or other lenders. The Fannie Mae Commitment Rate is the rate that Fannie requires for a par-priced loan.
Commitment Ratio means, the ratio, expressed as a percentage, of (a) the sum of (i) the Commitments held by such Lender and (ii) the outstanding principal amount of Term Loans held by such Lender divided by (b) the sum of (i) Commitments held by all Lenders, (ii) the outstanding principal amount of Term Loans held by ...
"A salary commitment is a calculation against salary to predict future funding needs on the assigned accounts for a given period of time typically to the end of an appointment or end of an accounting period.