Firm Commitment

1. A lending institution's promise to enter into a loan agreement with a specific entity, within a certain period of time.

2. An underwriter's agreement to assume all inventory risk and purchase all securities directly from the issuer for sale to the public at the price specified.

Investopedia Says:
1. The lender specifies the terms that that must be met in order for the loan to be processed. Also known as a "standby loan commitment."

2. In a firm commitment, underwriters act as a dealer and are responsible for any unsold inventory. The dealer profits from the spread between the purchase price and the public offering price. Also known as a "firm commitment underwriting."

Lending: term used by lenders to refer to an agreement to make a loan to a specific borrower within a specific period of time and, if applicable, on a specific property. See also Commitment Fee.

Securities underwriting: arrangement whereby investment bankers make outright purchases from the issuer of securities to be offered to the public; also called firm commitment underwriting. The underwriters, as the investment bankers are called in such an arrangement, make their profit on the difference between the purchase price-determined through either competitive bidding or negotiation-and the public offering price. Firm commitment underwriting is to be distinguished from conditional arrangements for distributing new securities, such as standby commitments and best efforts commitments. The word underwriting is frequently misused with respect to such conditional arrangements. It is used correctly only with respect to firm commitment underwritings or, as they are sometimes called, Bought Deals. See also Best Effort; Standby Commitment.

An irrevocable agreement that commits one of the parties to perform a certain act; most common in reference to commitments by lenders to provide financing.
Example: Good Money Bankers made a firm commitment to finance a shopping center that had been Preleased.