What is Excess Spread?
Excess spread is a key concept in consumer finance, specifically when looking at warehouse facilities and asset-backed securitizations. At a high level, […]
What is Weighted Average Life of a Loan Portfolio?
The weighted average life (WAL) of a loan portfolio is a measure of the average length of time that each dollar of […]
What is a Trustee?
A trustee plays a critical role in a consumer loan debt warehouse facility. As the independent third party oversight on the facility, […]
What is a DACA Account? (Deposit Account Control Agreement)
A Deposit Account Control Agreement (DACA) is a legal agreement that gives a lender some control over a borrower’s bank account. DACAs […]
What are Protective Provisions for Warehouse Facilities?
A protective provision, also known as a veto right, is a clause that gives investors a level of control or provides safeguards […]
What is a Structuring Fee?
A structuring fee is an upfront fee charged by lenders when putting together a new debt warehouse facility. It is intended to […]
What is Tangible Net Worth?
Tangible net worth (TNW) is an important financial metric that lenders use to assess a company’s financial health and ability to repay […]
What is an Event of Default?
An event of default (EOD) is a breach of the terms of a debt facility or loan agreement by the borrower. EOD […]
What is the Difference Between Committed Amount and Total Facility Amount?
When a company takes on debt financing, whether from a bank or other lending institution, the loan agreement contains terminology that specifies […]
What is a payment waterfall?
A payment waterfall refers to the priority order in which interest, principal, fees and other payments are made from the cash flows […]
Understanding covenants in debt facilities
Debt facilities like loans and credit lines often come with strings attached in the form of covenants. Covenants are promises made by […]
What is a custodian?
In large commercial debt facilities, custodians play a critical behind-the-scenes role in keeping documentation and collateral secure. While retail bank customers may […]