what is a commitment fee 
a commitment fee is a charge that a lender may impose on a borrower in return for committing to make a line of credit available to them whenever they choose to access it commitment fees are typically based on the amount of credit the borrower has available but isn t using at the time while lenders receive interest on outstanding balances commitment fees compensate them for the rest of the money they have committed to lend but aren t otherwise profiting off of commitment fees can come in the form of flat fees or be based on a percentage of the unused balance according to the internal revenue service business borrowers cannot deduct commitment fees as interest but may be able to deduct them as business expenses 2