Definition for : Advance rate

The "advance rate" is - in the context of a secured funding - the approved maximum lending amount divided by the Value of the Collateral given as Security to the lender by the borrower. Among other examples, advance rates are used in relation to asset-based lending (E.g. hedged/unhedged oil reserves), lending Collateralised by Future cash flows (E.g. pre-export loan or Securitisation of Future commodities exports), but also in relation to Equity-backed funding.

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