Business, Legal & Accounting Glossary
The fee paid by a borrower to a syndicate of banks for making a loan. The fee is often tiered, with the agent bank receiving a larger amount as consideration for structuring the loan and/or underwriting larger amounts and thereby assuming greater risk. Upfront fees paid to syndicate members are almost always a function of commitment size. Sometimes upfront fees will be structured as a percentage of the sum committed to the loan plus a flat fee. For instance, an upfront fee of 100 basis points plus $50,000 flat fee. The flat fee is fixed, but the balance of the total fee is a percentage of the bank’s ultimate allocation after the loan is syndicated. If a bank commits $100 million to a $1 billion credit but $2 billion is received in commitments the bank’s final allocation may be only $50 million. The upfront fees would then be $50,000 plus 100 basis points of the $50 million final allocation.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Upfront Fee are sourced/syndicated and enhanced from:
This glossary post was last updated: 9th April, 2020 | 0 Views.