what is a borrowing base 
a borrowing base is the amount of money that a lender is willing to loan a company based on the value of the collateral the company pledges the borrowing base is typically determined by a method known as margining in which the lender determines a discount factor which is then multiplied by the value of the collateral in question the resulting numerical figure represents the amount of money a lender will loan out to the company understanding borrowing basesvarious assets may be used as collateral including accounts receivable inventory and equipment if a company approaches a lender to borrow money the lender will assess the borrowing company s strengths and weaknesses based on the perceived risk the lending company associates with loaning money to this company a discount factor is then determined say 85 under this scenario if the borrower offers 100 000 worth of collateral the maximum amount of cash the lender will give the company is 85 of 100 000 which equals 85 000 oil and gas companies might borrow against the production of a field or proven order quantity with the lender receiving a monthly quota in return a borrowing base is the amount of money a lender is willing to loan a company based on the value of the collateral the company presents 