Borrowing Base


Borrowing Base
The amount of money a lender will loan to a company based on the value of the collateral the company pledges. The borrowing base is usually determined by a method called margining, where the lender determines a discount factor that is multiplied by the value of the collateral; the result is the amount that will be loaned to the company.

For example, if company X goes to a lender to borrow money, the lender will assess the company's strengths and weaknesses and evaluate the lender's risk. Based on the risk the lending company feels is associated with lending money to company X, a discount factor is determined, say 85%. If company X is offering collateral that is worth $100,000, the amount the lending company will give the company is equal to 85% of $100,000, or $85,000.


Investment dictionary. . 2012.

Look at other dictionaries:

  • borrowing base — USA In the context of asset based lending, the maximum amount of revolving loans that lenders are willing to lend to a borrower at a given point in time based on the value of certain assets of the borrower (rather than its cash flow). The… …   Law dictionary

  • Borrowing-Base-Finanzierung — Im Zusammenhang mit Unternehmensfinanzierungen spricht man von einer Borrowing Base Finanzierung, wenn ein Kreditgeber dem Kreditnehmer im Rahmen einer Finanzierung seines Umlaufvermögens revolvierend liquide Mittel zur Verfügung stellt und dabei …   Deutsch Wikipedia

  • bank base rate — The bank base rate is set by the Bank of England and determines the cost of borrowing money. This base rate is used by commercial banks as a reference point when setting their own base rates. An increase in the base rate will increase the rates… …   Financial and business terms

  • Eurodollar base rate — USA Eurodollar rate, Also known as the LIBOR rate or Eurodollar base rate. Used to calculate the adjusted Eurodollar rate. Determined by what is shown on the Reuters Screen LIBOR 01 Page or, if not available, the rate at which US dollar deposits… …   Law dictionary

  • Consumer Product Safety Improvement Act — Consumer Safety Act Full title Consumer Product Safety Improvement Act Acronym CPSIA Colloquial name(s) Consumer Act Enacted by the 110th United States Congress Effective …   Wikipedia

  • Second lien loan — (or last out participation) is a form of loan with a security interest in the assets of a company that are second in ranking behind a traditional senior credit facility. A lien is a form of security interest granted over an item of property to… …   Wikipedia

  • Leor Energy — Overview Leor (LEE or) Energy is a Houston based natural gas exploration company focused primarily on unconventional gas in North America. In November 2007, Leor sold its Deep Bossier natural gas and land interests (including its 50% stake in the …   Wikipedia

  • government budget — Forecast of governmental expenditures and revenues for the ensuing fiscal year. In modern industrial economies, the budget is the key instrument for the execution of government economic policies. Because government budgets may promote or retard… …   Universalium

  • Economic Affairs — ▪ 2006 Introduction In 2005 rising U.S. deficits, tight monetary policies, and higher oil prices triggered by hurricane damage in the Gulf of Mexico were moderating influences on the world economy and on U.S. stock markets, but some other… …   Universalium

  • United Kingdom — a kingdom in NW Europe, consisting of Great Britain and Northern Ireland: formerly comprising Great Britain and Ireland 1801 1922. 58,610,182; 94,242 sq. mi. (244,100 sq. km). Cap.: London. Abbr.: U.K. Official name, United Kingdom of Great… …   Universalium


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.