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This is generally a report submitted to the lemder by the borrower that report such things as asset values on a periodic basis determined by the lender so the terms of the asset based borrowing is within compliance. These tend to be working capital or lines of credit loans, say by a financial institution. The terms of the loan may be that the company can borrow up to 50% of all accounts receiveable that are less than 60 days old. When reporting, the borrower submits a report and the cap of the borrowings is reviewed to let the lender know their loan is secured by the assets used as collateral per the loan agreement. If the company has too much advanced, they will need to repay the excess in a very limited time period, if not immediately or the certificate will show that the company can borrow more ifit needs to. Unlike a fixed loan, borrowing base certificates help calculate the ever changing maximum amount that can be borrowed for short term cash flow needs.

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