What does standby fee mean in financial management?

A standby fee in financial management refers to a charge incurred by a borrower for having access to a line of credit or loan that is not currently being utilized. This fee compensates the lender for reserving the funds for the borrower, ensuring they can draw on the credit when needed. It is commonly associated with loan agreements and credit facilities, providing lenders with a form of income even when the borrower is not actively using the funds.