Lesson 7 of 25 · 6 min
Per-name lending value is market value times the advance rate
Every lending-value cell is a product. No second term enters it.
Track 1 lesson 3 wrote the identity as a sentence. This lesson writes it as five multiplications on the same book, so the identity has nowhere left to hide. Lending value on a row is market value multiplied by that row's advance rate. There is no additive constant, no portfolio-level overlay inside the cell, and no adjustment for how much you have drawn.
lending value = market value × advance rate
- lending value
- What the row contributes to the collateral the facility recognises.
- market value
- Units times the price used on the statement. Public, and not the operative figure.
- advance rate
- The percentage looked up for this row's category, after any concentration or eligibility overlay that has already been applied to the rate itself.
The five March cells are the identity and nothing else. $1,838,300 × 0.50 = $919,150. $1,840,005 × 0.35 = $644,001.75. $891,420 × 0.70 = $623,994. $511,680 × 0.55 = $281,424. $951,390 × 0.85 = $808,681.50. If a later overlay exists — a concentration cliff, an eligibility floor — it shows up as a different advance rate in the third term, not as a fourth term after the product.
Capacity is a later sum, and the facility limit is a later minimum. Neither belongs inside a row. Mixing them in is how a borrower concludes that Meridian 'supports' $919,150 of the loan, as if the loan were allocated across names. The loan is one balance. The rows are five separate products. The products add; they do not assign.
A row's lending value does not know the size of the loan. It would be the same number if the balance were zero.
Key terms
- Per-name lending value
- One holding's market value multiplied by that holding's advance rate. A product, not an allocation of the loan.
- Operative price
- The price the statement uses to form market value. The product starts there, not from a price you prefer.
- Overlay
- A concentration or eligibility rule that changes the advance rate before the product is taken, rather than adjusting the product afterwards.
Worked example
Five products, no remainder
The March rows, each reduced to the identity. Illustrative rates as applied.
- Meridian
- $919,150
- Calder
- $644,001.75
- Collective
- $623,994
- Oakridge
- $281,424
- Government fund
- $808,681.50
- Sum, which is not a sixth product
- $3,277,251.25
$1,838,300 × 0.50.
$1,840,005 × 0.35.
$891,420 × 0.70.
$511,680 × 0.55.
$951,390 × 0.85.
The identity is exhausted after five multiplications. Anything else — a limit, a draw, a blend — is a later operation on the sum.
Check yourself
Oakridge is $511,680 at 55 percent. What is its lending value, and does that figure change if the drawn balance rises from $1,847,220 to $2,000,000?
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Educational only. Nothing in this lesson is investment, legal or tax advice, or a recommendation to enter into any transaction. Figures are illustrative and computed from the inputs stated in the lesson.