Commitment Charge; Credit Sample Clauses

The Commitment Charge; Credit clause defines the fees a borrower must pay to a lender for the unused portion of a loan commitment, as well as any credits that may offset these charges. Typically, this clause applies to revolving credit facilities or lines of credit, where the lender reserves funds for the borrower’s use, but the borrower may not draw the full amount immediately. The clause ensures the lender is compensated for making funds available, even if they are not utilized, and may also specify circumstances under which the borrower can receive credits to reduce the overall charge. Its core function is to allocate the cost of maintaining available credit, incentivizing efficient use of committed funds and compensating the lender for the opportunity cost of reserving capital.