Lesson 16 of 25 · 6 min

The available-to-draw line

Undrawn capacity is the limit minus the opening balance, not the gap to the maintenance trigger.

Available-to-draw, printed here as undrawn at open, is a limit identity, not a maintenance identity. The facility limit is $2,400,000.00. The opening drawn balance is $1,847,220.00. Undrawn at open is $2,400,000.00 − $1,847,220.00 = $552,780.00. That subtraction is the whole line. It does not look at market value, lending value, or the 70% threshold.

undrawn at open = facility limit − opening drawn balance

facility limit: The contractual ceiling on drawn principal. Here, $2,400,000.00.
opening drawn balance: What is already drawn at the start of the period. Here, $1,847,220.00.
undrawn at open: The residual under the limit at that instant. Here, $552,780.00.

Three other gaps sit on the same page and are larger. Lending value minus opening drawn balance is $3,277,251.25 − $1,847,220.00 = $1,430,031.25. Permitted loan on the 70% market-value test minus the opening is $4,222,956.50 − $1,847,220.00 = $2,375,736.50. Headroom to the trigger, computed later, is larger still. None of those is the available-to-draw line. The binding ceiling on a further draw, as this statement states it, is the residual under $2,400,000.00.

The line is also dated. It is undrawn at open, so it uses the $1,847,220.00 opening, not the $1,858,563.47 close. After capitalised interest the residual under the same limit is $2,400,000.00 − $1,858,563.47 = $541,436.53. The page does not reprint that closer figure. Interest of $11,343.47 quietly spent $11,343.47 of limit room without a draw. Headroom to the 70% trigger is a different residual, in dollars of collateral rather than dollars of unused limit, and the two are not interchangeable.

Key terms

Facility limit: The contractual maximum drawn principal. Here, $2,400,000.00. Separate from lending value and from the maintenance test.
Undrawn at open: Limit minus opening drawn balance. Here, $552,780.00. The available-to-draw line on this page.
Binding ceiling: Whichever constraint is tightest on a further draw. On these figures the limit residual is tighter than the lending-value residual.

Worked example

Three residuals, one printed line

Opening drawn balance $1,847,220.00 against three different ceilings on the March page.

Facility limit: $2,400,000.00
Undrawn at open (printed): $2,400,000.00 − $1,847,220.00 = $552,780.00
Residual under lending value: $3,277,251.25 − $1,847,220.00 = $1,430,031.25
Residual under 70% of market value: $4,222,956.50 − $1,847,220.00 = $2,375,736.50
Undrawn at close, not printed: $2,400,000.00 − $1,858,563.47 = $541,436.53
Limit room interest consumed: $11,343.47

The printed available-to-draw is the small residual. The two collateral residuals are larger. Mixing them up invents capacity the limit does not grant.

Check yourself

Facility limit $2,400,000.00, opening drawn balance $1,847,220.00, lending value $3,277,251.25. What is undrawn at open, and why is $1,430,031.25 not that figure?

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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.