Availability Block

Last Updated: Jun 6, 2019

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An availability block is placed within a revolving credit facility that prohibits a borrower from utilizing all of the availability generated by their borrowing base.

For example, if a company's gross availability was $10 Million and the current loan balance under the line was $3 Million, a $5 Million availability block would reduce the company's net availability to $2 Million, whereas it had been $7 Million before the block was put in place. Blocks are a valuable tool that can be used to insulate a lender from the credit risk of a borrower's deteriorating financial performance and insure that the proceeds from the liquidation of the assets will be able to repay the borrower’s obligations.