Borrowing base
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Borrowing base is an accounting metric used by financial institutions to estimate the available collateral on a borrower's assets in order to evaluate the size of the credit that may be extended.[1] Typically, the calculation of borrowing base is used for revolving loans, and the borrowing base determines the maximum credit line available to the borrower.[2][3] Occasionally, borrowing base is also used to determine the maximum size of a term loan. Depending on the contractual terms of the loan, the assets included in the calculation of the borrowing base may be used as collateral for the loan.[4]