Borrowing Base Advance Rate Calculator

Advance rates vary by collateral tier. This calculator computes a weighted advance rate.

Tier 1 value

Tier 1 advance %

Tier 2 value

Tier 2 advance %

Tier 3 value

Tier 3 advance %

Weighted advance rate

68.13%

Total advance $

$27,250,000

Total collateral

$40,000,000

How the math works

Weighted = sum(value × rate) ÷ total value.

Negotiate advance rates tier by tier. A 5-point lift on tier 2 (the largest bucket) often produces more additional capacity than a 10-point tier 3 lift. Know where the advance dollars come from.

How to Use

Enter tier 1 (strong) value and rate.
Enter tier 2 (standard) value and rate.
Enter tier 3 (weak) value and rate.
Read weighted advance rate.

Frequently Asked Questions

Why tier?

Not all collateral is equal. Prime real estate advances at 75%. Older, out-of-favor asset class 55%. Distressed or transitional assets 40%. Tiered advance recognizes quality differences.

Tier definitions?

Typically lender-defined by asset class, occupancy, tenant credit, DSCR, vintage. Document tier assignment for each asset in the pool; re-tier annually as conditions change.

Weighted vs blended?

Weighted advance = sum(tier value × tier rate) ÷ total value. Represents effective advance rate on whole pool. Use for borrowing capacity modeling and negotiation.

How does this interact with the rest of the capital stack?

Each tier of the stack affects the next. Senior debt constrains LTC and DSCR. Mezz and pref consume equity spread. Interest rate hedges protect DSCR but cost premium. Always model the full stack holistically — optimizing one tier alone often degrades another. Institutional underwriters run three or four scenarios across the stack before committing capital.