Credit Amount Borrowing Base Sample Clauses

The "Credit Amount; Borrowing Base" clause defines the maximum amount of credit a borrower can access, which is determined by the value of certain eligible assets, known as the borrowing base. In practice, this clause outlines the method for calculating the borrowing base—often as a percentage of the value of inventory, accounts receivable, or other collateral—and sets limits on how much can be borrowed at any time. Its core function is to protect the lender by ensuring that the amount loaned is always backed by sufficient collateral, thereby managing credit risk and maintaining financial discipline.