Excess Cash Flow Sweep (Banking & Finance Glossary)

Summary

A provision in a Credit Agreement whereby a certain amount of Excess Cash Flow is required to be prepaid by the Borrower. The Borrower and the Lenders will negotiate when and what percentage of excess cash flow is required to be prepaid to the Lenders. It is not uncommon to see a requirement for Borrowers to prepay 50-75% of excess cash flow in a credit agreement. Oftentimes there will be Stepdowns in the percentage of this Excess Cash Flow Sweep based on the achievement of a specified leverage ratio.