Glossary · underwriting

Availability

Also called excess availability, net availability, undrawn availability.

What you can actually draw right now: the borrowing base less reserves, less loans outstanding, less letters of credit issued — a figure recalculated every reporting period rather than fixed at closing.

Drafted with AI assistance and checked by a person. Its factual claims were verified against the sources listed at the end, by Find Me Funders research desk.

What it means

The facility limit is what the lender agreed to at closing. Availability is what the collateral supports today. On any working asset-based or factoring facility, the second number is the one that governs, and it is re-earned every certificate.

The calculation

Eligible collateral by class, times each class's advance rate, capped at any sublimit, less reserves, less loans outstanding, less letters of credit issued under the facility even though no cash moved for them. What is left is availability. Where the result is negative, you have an overadvance, which is repayable on demand under most agreements.

Why it moves without your sales moving

  • An invoice ages past the eligibility cutoff
  • A debtor tips over a concentration cap, or over a cross-age trigger
  • A field exam produces a higher dilution rate, so the dilution reserve resets upward
  • A new reserve is imposed: rent for premises in landlord-lien states, accrued payroll tax, a disputed invoice, a customer deduction pattern
  • A seasonal inventory build runs into a sublimit

Availability as a covenant

Many agreements set a minimum excess availability that must be maintained at all times, and a springing trigger at a higher level. Falling below the trigger can turn on cash dominion, activate a fixed charge coverage covenant that was otherwise dormant, force weekly or daily reporting, or block distributions. These consequences are automatic. Nobody has to decide to impose them.

Where this one catches people

The line is not a number you own. It is a number you re-earn each reporting period, and the mechanism that reduces it is the same mechanism that creates the need for cash: customers paying slower.

Two things to check before signing. First, whether the funder may establish new reserves in its discretion — nearly every asset-based agreement permits this in the exercise of reasonable credit judgment, and a reserve is the fastest way to shrink your access without amending anything. Second, exactly what happens at the availability trigger, because a sweep and a springing covenant arriving in the same week as a customer default is how a workable facility becomes a workout.

Budget from a stressed base, not from the commitment. If your plan only works at full drawn capacity, you do not have a facility, you have a hope.

Worked through

Illustrative. Commitment 2,000,000.

Eligible receivables 1,400,000 at an 85 percent advance rate: 1,190,000.
Eligible inventory 600,000 at 50 percent: 300,000, but the inventory sublimit is 250,000, so 250,000 counts.
Gross base: 1,440,000.

Reserves: dilution 45,000, rent 30,000, accrued payroll tax 20,000. Total 95,000. Net base 1,345,000, well below the 2,000,000 commitment, so the base governs.

Outstanding loans 1,100,000 plus a 60,000 letter of credit issued under the facility: 1,160,000 used.

Availability = 1,345,000 − 1,160,000 = 185,000.

Now one customer's balance trips the cross-age rule and 250,000 of receivables become ineligible. The base falls by 250,000 × 0.85 = 212,500, to 1,132,500 — which is less than the 1,160,000 already outstanding. Availability is not merely zero. There is an overadvance of 27,500, due on demand, in the same week the customer stopped paying.

Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.

Where you will meet this term

Working Capital Business Line of Credit Invoice Financing Asset-Based Lending

Read next

Advance rateThe share of an asset's eligible value a funder will put up front, used in factoring, asset-based lending and… Asset-based lending (ABL)A revolving facility sized by a formula against the value of receivables, inventory and sometimes equipment o… Borrowing baseThe pool of eligible collateral, each class multiplied by its own advance rate and reduced by reserves, that … ConcentrationHow much of a business's revenue or receivables depends on a single customer, and the cap funders place on ho… Cross-agingThe eligibility rule that disqualifies every invoice from a customer once too large a share of that customer'… DilutionThe gap between what a business invoices and what it eventually collects, caused by credits, returns, allowan… Eligible receivableAn invoice that counts toward the borrowing base because it passes the lender's tests on age, customer, conce… Ineligible receivablesInvoices a factor or asset-based lender excludes from the borrowing base entirely, so they generate no availa… OveradvanceFunding beyond what the borrowing base formula supports, extended as a temporary and usually discretionary ac… ReserveThe portion of an invoice's face value a factor holds back at funding and releases, less fees, once the custo…

Sources and checks

Every figure on this page traces to a document someone read, on a date. Where a check is past its review date it says so rather than passing as current.

  1. the availability example recomputes to 185,000, and the cross-age shock correctly produces a 27,500 overadvance example
    AR 1,400,000 x 0.85 = 1,190,000; inventory 600,000 x 0.50 = 300,000 capped to the 250,000 sublimit. Gross base = 1,440,000; reserves 45,000 + 30,000 + 20,000 = 95,000; net base = 1,345,000. Used = 1,100,000 loans + 60,000 letter of credit = 1,160,000. Availability = 1,345,000 - 1,160,000 = 185,000. Cross-age shock: 250,000 x 0.85 = 212,500; 1,345,000 - 212,500 = 1,132,500; 1,160,000 - 1,132,500 = 27,500 overadvance. Every step checks.
    Find Me Funders — Arithmetic recomputed and checked in review Verified against source Checked 10 Sep 2026 by Find Me Funders research desk

Availability — common questions

What does availability mean?

What you can actually draw right now: the borrowing base less reserves, less loans outstanding, less letters of credit issued — a figure recalculated every reporting period rather than fixed at closing.

Where does availability catch people out?

The line is not a number you own. It is a number you re-earn each reporting period, and the mechanism that reduces it is the same mechanism that creates the need for cash: customers paying slower.

Is availability the same as an interest rate?

Availability is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.

Which products does availability apply to?

Working Capital, Business Line of Credit, Invoice Financing, Asset-Based Lending.

Is there a worked example of availability?

Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.

What else should I read alongside availability?

Advance rate, Asset-based lending, Borrowing base, Concentration, Cross-aging.

Has this definition been checked?

Yes. Its claims were verified against the sources listed at the end of this page, and the reviewer is named.

Is this legal advice?

No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.

Can I suggest a term?

Yes — [email protected]. The glossary grows from what people are actually shown in contracts.