Borrowing base

In the context of corporate finance is used by a borrowing base financing, when a lender provides the borrower under a financing its working capital revolving cash available and the maximum possible utilization of a promised frame to the holdings of current assets ( = borrowing base ) the borrower couples. These stocks are usually, but not necessarily, used as collateral for the loan. The credit agreement a number of assets as current assets are defined, which - with a percentage also defined Rated - the Borrowing Base Value arise. This sets the upper limit of the overdraft facility from the agreed credit limit for a defined time interval.

The method of calculation of the Borrowing Base Value is individually defined in the loan agreement: Starting from the basis of compulsory stocks of current assets ( are common here, raw materials and supplies, work in process and finished services and receivables from deliveries / services ) is determined which percentage reduction in the relevant asset class applies. It may be agreed that certain asset classes after a certain period ( eg exceeding a certain storage period ) or event (eg overdue receivables ) are no longer to be included in the calculation.

• Financing