Professional Services. Borrowing-base revolving trade facility design and placement. Prepared September 2025.
Borrowing-Base Revolving Trade Facility Setup
Unlock working capital against inventory and receivables without selling equity. We design the borrowing base, put clean controls around title and collections, then place the revolver with lenders who actually lend against stock and invoices. Goal is simple. Faster turns and predictable liquidity.
Who it suits
Commodity traders, processors, exporters, distributors with repeat flows.
Typical size
USD 5m to 150m. Upsize once data and controls prove out.
Collateral
Eligible inventory and eligible receivables with clear title and takeout.
What A Borrowing-Base Revolver Is
A revolving facility that advances a percentage of eligible collateral. The base updates daily or weekly. You borrow, repay, then redraw as goods move and invoices come in. Lenders fund against a certificate and supporting reports. You keep control of the trade while the bank controls cash waterfalls and title.
Why it works
Funding tracks liquid collateral. Less cash tied up. Lower cost than pure unsecured lines for most mid-market names.
Key control
Tripartite title arrangements or CMA, blocked collections account, BBC reporting, and periodic field exams.
How It Works
- Scope and data. We map flows, locations, grades, payment terms, and counterparties. Quick data pack first.
- Base design. Define eligibility, reserves, and advance rates by asset class. Set waterfalls and cure rules.
- Controls. Put CMAs or warehouse receipts in place. Open controlled collections and margin accounts.
- Term sheet and lender. We place the deal with banks or credit funds that like your assets and lanes.
- Docs and go-live. Security, accounts, BBC template, reporting cadence. First draw after conditions are met.
Advance Rates And Eligibility
| Collateral | Typical Advance | Eligibility Notes | Reserves |
|---|---|---|---|
| Inventory in bonded or controlled warehouses | 50% to 75% of NLV | Title control, insured, standard grades, daily price marks | Shrink, FX, price volatility |
| In-transit inventory with clean B/L | 40% to 60% | Negotiable B/L or acceptable eB/L, named carrier, clear ETA | Transit risk, route risk |
| Trade receivables | 70% to 90% of eligible AR | A-rated buyers or insured, under 60 DSO, no disputes | Concentration, aging, dilution |
| Insured receivables | Up to 90% | Valid policy, assignment of proceeds, no exclusions triggered | Policy deductibles, claim timing |
Final rates depend on grade, location, custody, buyer quality, and insurance. Lenders set caps and reserves to cover real risk.
Pricing And Core Terms
| Item | Typical Range | Notes |
|---|---|---|
| Margin over benchmark | SOFR or term rate plus 300 to 700 bps | Tighter for insured AR and controlled stock. |
| Commitment fee | 0.50% to 1.50% on undrawn | Applies to the committed line. |
| Arrangement fee | 1.0% to 2.0% of facility | One time at close. |
| Monitoring | Field exam and collateral audit costs | Quarterly or semiannual based on scale. |
| Tenor | 12 to 36 months | Rolling renewals tied to performance. |
Controls And Reporting
Title and custody
Collateral management agreements, warehouse receipts, tripartite letters with operators.
Cash control
Blocked collections, cash waterfall, daily sweeps, covenant triggers that are clear and fair.
Valuation
Market marks, haircuts, and reserves tied to real volatility and grade differentials.
BBC and audits
Borrowing base certificates with backup reports and regular field exams to keep confidence high.
Documents We Need To Start
Company
KYC, ownership chart, audited financials, recent management accounts, bank statements.
Trade data
Historic shipment files, AR aging, inventory reports by site and grade, counterparty list, payment terms.
Collateral
Warehouse agreements, CMA drafts, insurance policies, sample B/Ls, title documents.
Controls
Collections account details, proposed waterfall, FX and hedging policy, covenant headroom.
Common Pitfalls And How We Avoid Them
- Loose eligibility. We define clean rules. Fewer disputes on every BBC.
- Weak custody. We use CMAs and title control. Lenders stay comfortable and pricing reflects it.
- Buyer risk. We push for insurance or concentration caps where buyers are thin.
- Price shocks. Reserves and hedging align with reality. No surprises at sweep time.
Frequently Asked Questions
How fast can we close
Simple lines with clean data can close in a few weeks. Complex structures with new CMAs and multiple sites take longer.
Do we need cash collateral
Usually not if title and cash controls are strong. Some lenders ask for a small liquidity reserve in early months.
Can we combine with LCs
Yes. Revolvers often sit next to LC lines and UPAS refinancings. We align covenants to avoid cross defaults.
What assets are ineligible
Slow moving stock, consignment goods without title, disputed AR, related party AR, and aging beyond limits.
Set Up Your Borrowing-Base Revolver
Send your inventory and AR reports. We will shape the base, line size, and lender list so you can draw with confidence.
Start NowDisclaimer. Service is advisory and arrangement. Facility terms are set by lenders after diligence. Pricing, advance rates, and timelines depend on asset quality, controls, and performance history.
