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. The commitment fee is typically lower than the interest rate that is charged on the drawn portion of the loans.

The payment of this fee is not absolute, however. Many loan agreements provide that the borrower is excused from paying commitment fees to a lender that has defaulted on its obligations under the loan agreement (for example, it failed to fund its pro rata portion of any loans or other amounts under the loan agreement such as its letter of credit or swingline loan obligations).

For more information on commitment fees, see Standard Clauses, Loan Agreement: Borrowing Mechanics and Practice Note, Defaulting Lenders.