Economics
Utilization fee
Also known as: usage fee
status: draft
A fee charged on drawn amounts when facility utilization exceeds a specified threshold, typically 50% of the commitment. Utilization fees incentivize borrowers to either draw down fully or reduce commitment size.
What to watch
Utilization fees usually range from 10-25 bps on the drawn balance above the threshold. Model total cost of capital including utilization fees, especially if you expect uneven draw patterns or seasonal peaks.