Revolving Credit Facility: Terms, Process, and Client FAQ

This document provides a comprehensive description of the Revolving Credit Facility offered through our structured finance platform. The Facility is a receivables backed revolving line of credit. Availability is determined by a borrowing base calculated against eligible accounts receivable and, where applicable, a conservative advance against inventory. Pricing is expressed as a floating annual percentage rate indexed to the prevailing U.S. Prime Rate plus a contractual margin set during underwriting. Interest accrues only on amounts actually drawn. The objective is to provide predictable liquidity with clear controls, transparent reporting, and lender oversight consistent with commercial banking standards.

1) Facility Purpose and Use of Proceeds

The Facility is designed to finance working capital requirements that arise from normal trading cycles. Typical use cases include funding inventory procurement, bridging receivable collection cycles, supporting seasonal volume increases, and meeting short term obligations where timing differences exist between payables and cash collections. The Facility is not intended for speculative activity or unrelated long term investments. Use of proceeds is monitored through agreed reporting and covenant frameworks.

2) Eligibility Criteria

• Operating history of not less than twenty four to thirty six months with verifiable financial statements.
• Recurring invoicing to identifiable counterparties with documented terms and proven payment performance.
• Acceptable customer concentration profile or mitigants such as credit insurance or purchase limits per obligor.
• Compliance with KYC, AML, and sanctions requirements for the borrower and principal counterparties.
• Corporate good standing, clear tax status, and absence of undisclosed liens on receivables or inventory.

3) Facility Sizing and Borrowing Base

The committed ceiling is typically set at up to eighty percent of the prior twelve months invoiced sales, subject to lender approval. Within this ceiling, borrowing capacity is determined by the borrowing base, which represents a percentage of eligible receivables less reserves. Eligibility criteria are defined in the facility documentation and usually include aging limits by day bucket, maximum obligor concentrations, geographic or industry limits, and treatment of disputed or credit impaired accounts. Inventory advances, if permitted, are applied conservatively and subject to enhanced monitoring.

• Facility ceiling: an approved maximum commitment against which utilization may occur.
• Borrowing base: periodic calculation based on eligible receivables net of ineligible items and agreed reserves.
• Ineligible items: receivables past an agreed aging threshold, cross aged accounts, contra accounts, intercompany receivables, and any amounts subject to dispute or setoff.
• Concentration caps: advance rate reductions for obligors exceeding defined percentage thresholds of total eligible receivables.
• Inventory add on: where applicable, a separate and lower advance rate on finished goods with controls such as periodic exams and reporting.

Illustrative sizing. A borrower with one million three hundred thousand dollars in annual invoicing, clean receivables aging, and balanced customer mix may expect a ceiling near one million dollars, subject to committee approval. Daily availability will fluctuate with eligible receivables and reserve adjustments, and replenishes as collections are received.

4) Pricing Framework

Pricing comprises a floating rate expressed as Prime plus a fixed margin per annum, determined by underwriting. The margin reflects credit quality, sector profile, tenor of receivables, operational controls, and any inventory component. Interest is calculated on an actual days basis over a three hundred sixty five day year and is payable only on utilized balances. Unused commitment fees are not standard in this product unless specifically negotiated for larger commitments that require capacity reservation.

5) Fee Model

• Engagement fee: a flat, non refundable fee, typically within the low tens of thousands to low twenties of thousands of U.S. dollars, payable at execution of the Engagement Letter. This funds underwriting, commercial diligence, fraud checks, financial modeling, data room preparation, lender coordination, and administration of the term sheet auction.
• Success fee: a one time fee equal to two percent of the committed facility amount, payable at initial closing. The fee is not recurring. It applies again only if we are mandated to source a new facility or renegotiate the existing one.

6) Roles and Counterparties

We act as arranger, structurer, and distributor. We do not lend from our balance sheet. Facilities are provided by banks, credit funds, and specialty finance companies that have executed forward flow arrangements with our platform. These arrangements enable timely engagement, consistent documentation standards, and predictable execution once underwriting is complete.

7) Term Sheet Auction

Following underwriting, we conduct a controlled auction among lenders whose mandates align with the borrower profile. Each lender receives a standardized package to ensure that pricing and terms are proposed on a comparable basis. The borrower reviews the submitted term sheets and selects the preferred offer. Where two offers are competitive on headline economics, we request final confirmations to obtain the most favorable aggregate outcome including covenants and operating terms.

• Shortlist limited to lenders with demonstrable capacity and clear mandate fit.
• Uniform data room, borrowing base methodology, and Q and A protocol.
• Explicit clarity on ineligibles, reserves, lockbox arrangements, and reporting cadence.
• Finalization conducted with formal credit committee confirmations before documentation.

8) Underwriting Scope

Underwriting covers quantitative and qualitative dimensions required by institutional lenders. The objective is a defensible credit file that supports approval and smooths documentation.

• Financial analysis including historical performance, margin stability, liquidity, and leverage.
• Receivables quality including aging, dilution, dispute trends, and collections performance.
• Customer analysis including concentration, creditworthiness, and sector risk.
• Operational controls including invoicing accuracy, reconciliation cadence, and dispute management.
• Legal and compliance checks including corporate status, sanctions, and tax standing.

9) Required Documentation

The following baseline documents are expected for underwriting and lender review. Additional items may be requested by counsel or credit during diligence.

10) Drawdown, Collections, and Reporting

• Drawdown: requests submitted through the lender portal or by agreed instruction. Funding typically occurs within one to two business days following approval.
• Collections: proceeds are directed to a controlled account or lockbox. Collections reduce outstanding utilization and restore availability.
• Reporting: borrower provides borrowing base certificates and receivables aging on a monthly cadence, or weekly during initial periods as required by the lender.
• Reserves: lenders may apply temporary reserves for documentation gaps, dispute spikes, or concentration breaches. Reserves are removed once conditions are remedied.
• Exams: periodic desktop reviews or field examinations validate collateral and controls.

11) Security Package and Covenants

• Security interest: first priority lien over accounts receivable and related proceeds, and where applicable over inventory and general intangibles.
• Negative pledge: restrictions on granting competing liens over pledged collateral without lender consent.
• Affirmative covenants: timely reporting, maintenance of books and records, tax compliance, and maintenance of insurance.
• Financial covenants: may include minimum tangible net worth, maximum leverage, or a minimum liquidity threshold appropriate to the business.
• Events of default: include non payment, misrepresentation, covenant breaches, cross default, insolvency events, and sanctions violations.

12) Timeline and Execution

Execution timing depends on document readiness and responsiveness during diligence. Mandates that provide complete financials, reconciled aged receivables, and prompt answers to credit questions typically progress from engagement to funding within a few weeks. Longer timelines are usually associated with releases of existing liens, audit adjustments, tax matters, or complex intercreditor arrangements.

13) Illustrative Interest Cost

The table below illustrates interest cost for a borrower maintaining an average utilization of three million dollars for forty five days, with pricing at Prime plus two percent and Prime assumed at eight point five percent per annum for illustration only. APR is ten point five percent. Interest is calculated on an actual over three hundred sixty five day basis.

Engagement and success fees are outside the APR calculation. APR pertains to interest on utilized balances. Fees fund the work required to secure lender commitments and are charged as described in the Engagement Letter and closing documents.

14) What We Do Not Issue

• Firm offers prior to underwriting and mandate execution. Any pre underwriting figures are indicative only.
• Side channel approvals outside the formal lender process. All steps proceed through the data room and lender credit desks.
• Facilities against unverifiable receivables or unsupported collateral claims.

15) End to End Process

1. Intake: submission of financial statements, receivables aging, customer list, and corporate documents through our portal.
2. Engagement: execution of the Engagement Letter and payment of the engagement fee. Data room is opened and document checklist is issued.
3. Underwriting: financial modeling, reconciliation of aging to general ledger, review of customer concentrations, and compliance screening.
4. Market package: preparation of a standardized presentation and borrowing base methodology for lenders.
5. Term sheet auction: distribution to aligned forward flow lenders, Q and A coordination, and receipt of written offers.
6. Selection and approvals: borrower selects preferred offer. Lender completes credit approval and confirms conditions.
7. Documentation: negotiation of facility agreement, security documents, and perfection of liens. Intercreditor matters addressed if applicable.
8. Activation: establishment of controlled account, reporting cadence, and operational procedures. First draw scheduled upon satisfaction of conditions precedent.

16) Clean File Checklist

• Maintain reconciled aged receivables weekly. Remove collected items and flag disputes promptly.
• Apply consistent invoice terms and enforce them. Irregular terms invite eligibility haircuts.
• Monitor concentration by obligor. Where a single customer grows beyond thirty percent of eligible receivables, expect caps or haircuts.
• Resolve tax filings and legacy liens before closing. Silent liens delay execution.
• Respond to diligence questions with concise, factual answers supported by documents.

17) Frequently Asked Questions

Can a firm rate be issued before the engagement is executed
No. Firm rates are issued by lenders after underwriting. Prior to that stage only indicative ranges can be shared for planning purposes.

What facility size is realistic for my company
Subject to credit approval, ceilings up to eighty percent of prior twelve months invoicing are common for qualified borrowers. Actual availability is governed by the borrowing base.

Is interest charged on undrawn amounts
No. Interest accrues on drawn balances only. Unused capacity does not incur interest.

Is the two percent success fee payable every year
No. It is payable once at the initial closing. If a new facility is sourced or the current facility is renegotiated under a new mandate, a new success fee applies to that transaction.

How long does the process take
Execution typically completes in weeks when documents are complete and responses are timely. Complex lien releases or intercreditor issues may extend the timeline.

Who holds the security interest
The selected lender holds a first priority lien over the agreed collateral and files the necessary perfection instruments.

Can inventory be included
In certain cases a conservative advance against finished goods may be included, subject to inventory controls and periodic examinations.

What if one customer represents a large share of sales
Concentration is manageable within documented caps and haircuts. The auction process seeks terms that reflect the real risk profile.

How are disputes handled for eligibility
Disputed receivables are typically ineligible until resolved and may be subject to reserve adjustments.

Can I maintain my existing banking relationship
Yes. Many borrowers retain their primary bank for treasury while using the Facility for working capital needs due to its receivables focus.

This document is informational and does not constitute a commitment to lend or an offer of financing. All facilities are subject to lender credit approval, satisfactory completion of KYC, AML, and sanctions screening, execution of definitive documentation, and perfection of security interests. Pricing and advance rates are subject to prevailing market conditions and the borrower’s credit profile.