What does Firm Commitment mean?

A Firm Commitment refers to an agreement between a lender and a borrower where the lender commits to providing a certain amount of funds to the borrower, usually at a specific interest rate and on specific terms. This can be used in real estate development, construction or other type of projects, where the developer need to secure financing before starting the project. A firm commitment is binding on the lender, who cannot change the terms or conditions of the loan, and typically contains penalties for any defaults or breaches of the commitment.

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