DIP Financing Cost Calculator

DIP financing funds Chapter 11 operations — quantify all-in cost including priming premium.

DIP principal

Base rate %

Credit spread %

Upfront fee %

Case duration months

Unused commitment fee %

Utilization %

All-in cost

$3,587,500

Effective annual rate

0.18%

Interest cost

$2,800,000

How the math works

Cost = interest + upfront + unused commitment over case duration.

$25M × 80% × (5%+9%) × 1yr = $2.8M interest + $750k upfront + $37.5k unused = $3.59M all-in.

How to Use

Enter DIP principal.
Enter base rate (SOFR or prime).
Enter credit spread %.
Enter upfront fee %.
Enter case duration months.
Enter unused commitment fee %.
Read all-in cost.

Frequently Asked Questions

What is DIP financing?

Debtor-in-possession loan extended to a company after it files Chapter 11. Grants the lender super-priority administrative claim (ahead of pre-petition secured), sometimes priming existing liens with court approval. Funds continuing operations, payroll, and restructuring professional fees. Typical duration: 6-18 months. Typical size: 5-25% of total debt stack. Lenders: existing pre-petition lender (defensive DIP) or new-money DIP provider (Gordon Brothers, Cerberus, Oaktree, Apollo).

Pricing?

Base rate + 500-1,200 bps spread common (vs 150-400 bps for healthy credit). Upfront fee 2-5% of commitment. Unused commitment fee 50-100 bps. Exit fee 1-3% on payoff. Professional fees: $500k-5M for DIP lender's counsel. All-in cost typically 15-25% annual effective rate. High because collateral coverage already thin, bankruptcy risk real, and DIP is priced for tail-event recovery.

Roll-up provision?

Many DIP credit facilities include a 'roll-up' where pre-petition debt is refinanced into the DIP loan, elevating it to super-priority status. Controversial — effectively converts unsecured pre-petition risk to priority administrative claim. Courts scrutinize closely. Creditors' committee usually objects. Negotiated partial roll-ups (20-50%) common compromise.

Alternatives?

Cash collateral usage (spend restricted cash with court approval — cheaper but limited to pre-petition cash). Critical vendor payments (pay key suppliers pre-petition claims to keep supply chain). 363 sale financing (short-term financing bridging to asset sale). Strategic bankruptcy (pre-packaged plan reducing duration and DIP size). DIP is typically required for companies with $50M+ debt and 6+ month restructuring horizon.