Borrowing base certificate meaning

A borrower’s periodic report to an asset-based lender that calculates and certifies the current borrowing base and, therefore, the amount available under an asset-based lending (ABL) or receivables/inventory revolving facility. Sometimes called a borrowing base report or availability certificate, it is not defined by legislation or case law; its form, frequency and content are set by the facility agreement (and related security documents). The certificate typically identifies eligible receivables and inventory and applies the agreed eligibility criteria, concentration limits, advance rates, dilution adjustments and lender reserves, producing the borrowing base figure against which utilisation is tested. Supporting schedules often include aged debtor lists and inventory reports by category and location. It is usually delivered before each utilisation and at agreed intervals (for example, weekly or monthly), signed by an authorised officer and relied upon by the lender for availability, covenant and default testing. Misstatements or failures to deliver commonly constitute an event of default and may trigger cash dominion or enhanced audit rights. Usage and market practice are broadly consistent across England and Wales, Scotland, Northern Ireland and Ireland, although security and perfection mechanics differ by jurisdiction; those differences do not alter the function of the certificate in ABL facilities.