Commitment Fee

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Related to Commitment Fees: Upfront Fee, Management fee

Commitment Fee

A fee that a lender assesses on a borrower to keep a credit line open regardless of use. For example, a credit card company may charge a card holder $60 per year to allow him/her to continue to use the credit card. This should not be confused with interest, which is only calculated if a loan is made or a credit line is used.
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The audit agency said the delay also caused the national government P10.7 million in commitment fees on foreign direct loans.
The Neda defines a commitment fee as the amount levied on the undisbursed loan amount or a portion thereof, payable per annum.
Firms that have to pay higher upfront commitment fees, higher risk premium spreads, or higher usage fees commit to a smaller credit line, while firms that face a higher penalty for overdrawing their line commit to a larger credit line.
The IRS argued that the nonrefundable portion of the commitment fees should have been included in Freddie Mac's income in the year of receipt, because the taxpayer had met the Sec.
arbitrators who are considering the adoption of cancellation and commitment fees. Although most arbitral institutions do not explicitly permit such fees, institutional guidelines are broad enough to allow for such fees.
When a loan commitment line is set up for a company, the company can borrow a preset amount of money in a predetermined period in exchange for paying commitment fees. Commitment fees paid to banks are regarded as interest subject to the Interest Rate Restriction Law and the law governing regulations on interest on deposits and capital subscriptions, so banks say they find it difficult to fix such fees.
When a commitment line is set up for a company, the company can borrow a preset amount of money in a predetermined period in exchange for commitment fees whenever necessary.
Moreover, large upfront and commitment fees, particularly for lead banks, have contributed to noninterest income.
Commitment fees, together with interests, guarantee fees and other charges account for 27.61 percent of the total annual debt payments.
The COA said the delayed implementation of the infrastructure projects has also caused the government to lose P27.647 million in commitment fees for the loans extended by Japan International Cooperation Agency (JICA).
If RP Energy had not cancelled, the company would have been burdened with commitment fees while its application lingered in uncertainty at the ERC.