Borrowing Base Funding

In connection with corporate financing , one speaks of borrowing base financing when a lender provides the borrower with revolving liquid funds as part of the financing of his current assets and thereby the maximum possible utilization of a promised framework for the stocks of the current assets (= borrowing base) of the borrower's pairs. These stocks are usually, but not necessarily, used as collateral for the loan . The credit agreement are a number of assets in current assets defined that - rated with a likewise defined percentage - yield the borrowing base value. This sets the upper limit of the possibility of drawing from the agreed credit line for a defined time interval.

The calculation method of the borrowing base value is individually defined in the loan agreement: Based on the underlying stock of current assets (raw materials and supplies, work in progress and finished services as well as trade accounts receivable), the percentage is determined Discount applies in the respective asset class . It can also be agreed that certain asset classes should no longer be included in the calculation after a certain period of time (e.g. exceeding a certain storage period) or event (e.g. overdue receivables).