Borrowing Base Definition
(Asset-Based Loan Agreement)


Summary

This borrowing base definition clause can be used in an asset-based loan agreement. The borrowing base is used by the lender to determine the initial and the ongoing maximum loan amount and to determine compliance with the financial covenants. This clause includes drafting notes and practical guidance. Conform the capitalized terms to defined terms in the relevant credit agreement. Read in conjunction with the practice note Advance Rates for Eligible Assets — Introduction to the Borrowing Base. For a full listing of key content covering asset-based lending, including agreements, security, guaranties, perfection, and priorities, see Asset-Based Lending Resource Kit.