A senior stretch loan, or overadvance loan, is a hybrid debt instrument consisting of both

asset-based loan Asset-based lending is any kind of lending secured by an asset. This means, if the loan is not repaid, the asset is taken. In this sense, a mortgage is an example of an asset-based loan. More commonly however, the phrase is used to describe lending ...

and

cash flow loan A cash flow loan is a type of debt financing, in which a bank lends funds, generally for working capital, using the expected cash flows that a borrowing company generates as collateral for the loan. Cashflow loans are usually senior term loans or ...

Borrowers

Such loans are suitable for two types of companies: *Companies that have substantial asset base but do not have stable or predictable cash flows. For example, troubled or turnaround companies. Cash flow loans would be much smaller and more expensive for these companies. *Companies with healthy cash flows but lower assets. In this case, a pure asset-based loan would be insufficient. For both types, the senior stretch debt structure takes advantage of the combination of the company's assets and

cash flow A cash flow is a real or virtual movement of money: *a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected ...

to make significantly more debt available than would have been otherwise.

References

Credit Loans {{econ-stub

Borrowers

See also

References