Borrowing Base

In finance, a borrowing base is the value assigned to a collection of a borrower's assets, used by lenders to determine the initial and/or ongoing loan amount, and/or compliance with one or more debt covenants. Assets included in the borrowing base are often but not necessarily considered as collateral for the loan. Specific methodology for the calculation of a borrowing base is contractually specified in an agreement between the borrower and lender. Such agreements typically recognize a percentage of the mutually agreed-upon full value of a specific set of assets, which may or may not include all assets owned by the borrower. The agreements also frequently include a methodology for updating asset values on a periodic basis over the life of the loan, allowing the borrowing base to be recalculated regularly. It is common to use Accounts Receivable and Inventory listings to calculate Borrowing Base valuations to determine available credit which usually takes the form of an operating line of credit. Borrowing Base is called "Margining" in some banking systems. A Borrowing Base Certificate is sometimes used to submit valuations to the lender for analysis.