How a borrowing base works
The lender starts with eligible accounts receivable, applies exclusions and an advance rate, then subtracts outstanding borrowings or reserves. Availability rises and falls as invoices are created and collected.
Common exclusions
| Receivable type | Typical treatment |
|---|---|
| Past-due invoices | Older receivables may be ineligible |
| Customer concentration | Large single-customer exposure may be capped |
| Affiliate receivables | Often excluded |
| Foreign receivables | May require special treatment |
| Disputed / contra balances | May be removed from eligibility |
WCP can support borrowing-base structures
SBA’s 7(a) Working Capital Pilot is designed for monitored working capital and can support borrowing against receivables or inventory for qualifying businesses.
Reporting burden is real
Expect regular borrowing-base certificates, A/R and A/P aging reports, financial statements and lender monitoring. The facility is operationally heavier than an unsecured line.
Best fit
Receivables financing can work well for growing B2B companies with creditworthy customers and long payment cycles. It is less attractive when invoices are highly concentrated, disputed or collected unpredictably.
Primary sources and reference material
Structure the financing around the business problem.
Good borrowing matches purpose, repayment source, maturity, collateral and liquidity. Compare the entire credit structure—not a single rate, speed claim or headline loan amount.