Advance Ratio

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Definition

Advance Ratio is the maximum percentage of the value of an asset or assets by reference to which a finance provider is prepared to make a loan or make available credit.

The value of the asset or assets is reduced in the calculation by a Security Margin, which is the inverse of the advance ratio. Where the advance ratio is 100%, the underlying finance may be termed 100% financing and may arise from a Commitment To Pay

The term is typically used in Supply Chain Finance

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