Modified Definition of Borrowing Base Clause Samples

The Modified Definition of Borrowing Base clause redefines how the borrowing base is calculated for a loan or credit facility. Typically, this clause adjusts the standard formula by including or excluding certain assets, changing advance rates, or applying additional eligibility criteria to the assets considered as collateral. For example, it might exclude specific types of inventory or accounts receivable from the calculation, or set stricter requirements for asset valuation. The core function of this clause is to tailor the borrowing base to better reflect the lender's risk tolerance and the borrower's financial situation, thereby ensuring that the amount of credit extended is appropriately secured.