Definition
A temporary advance above the normal borrowing base.
Why it matters
Used for seasonal peaks; usually priced higher.
Where it shows up in a deal
An over-advance is documented as an amendment or a side letter rather than a permanent change to the formula, with a stated amount, a step-down schedule and usually a higher price. It is requested ahead of a seasonal build, a large new contract or a payroll cycle that lands before a big collection.
What it affects
- It is repaid out of the same collections that would otherwise have funded new invoices.
- Availability in the following months is tighter by exactly the amount being stepped down.
- Funders generally want a specific reason and a defined repayment date, not an open-ended cushion.
- Repeated over-advance requests are read as a structural shortfall rather than a timing one.
A worked example
Availability is $800,000 against a $950,000 need. A $150,000 over-advance stepping down $50,000 a month over three months, priced at 2.25% per 30 days against a 1.25% base rate, costs $3,375 in the first month on the over-advanced portion alone.
The common mistake
Related terms
- Borrowing BaseThe maximum amount available under an asset-based line, calculated from eligible collateral.
- Asset-Based LendingA revolving credit line secured by receivables, inventory or equipment.
- Eligible ReceivablesInvoices that meet a funder's criteria for advancing.
- Working CapitalCurrent assets minus current liabilities — the cash available to run daily operations.
Questions about how over-advance affects your facility?
Call (929) 658-8087 or request a written quote — no obligation, no credit impact.
