What confirmation procedures are customary in an asset-based loan?
Answer – A lender customarily confirms financial and collateral information provided by the borrower in order to support ongoing loan requests. The level of controls and frequency of monitoring by the asset-based lender is directly related to the credit-worthiness of the borrower. Typical controls include: Borrowing Base Formula – A borrowing base formula monitors the relationship between the value of the collateral available to secure the outstanding loan, and the actual balance of the loan on a regular basis. Funding controls, or collateral reporting, may be required daily, weekly, or monthly, and range from submission of sales invoice documents to accounts receivable agings and inventory listings. Field Examinations – Many major lending organizations have a field examination group that visits the borrower’s operation to better understand its business. Field examinations benefit the borrower because they enable the lender to provide the maximum amount of liquidity possible that can b
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- What confirmation procedures are customary in an asset-based loan?
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