A borrower may want to use realised programme distributions to contribute towards a secured facility.
That is a possible use of available funds, but the repayment obligation and the programme's performance remain separate.
The lender expects payment according to the facility agreement. A programme distribution depends on activity, reconciliation and the terms of a different arrangement.
Understand the facility on its own terms
The borrowing brief needs to identify the amount, term, costs, collateral and repayment dates. The borrower should understand the lender's margin, release and enforcement conditions where applicable.
The primary repayment plan should explain the source and timing of funds and address the possibility of delays. Potential programme output should be identified as conditional rather than described as assured debt service.
This distinction matters most where a missed payment could affect collateral or other contractual rights.
Check that the assets are genuinely separate
A pledged position may not be available for a programme that requires an unencumbered, maintainable allocation. The obligations under both arrangements need to be checked before either is presented as part of a combined plan.
Our overview requires separately identified commitments unless the relevant principals expressly approve an alternative in writing. One balance cannot simply be counted as collateral and as an available programme position.
Apply only funds that are available for the purpose
Where output has been paid and allocated, it may be considered for facility payments if permitted by the relevant agreements. The borrower should confirm the currency, timing and receiving instructions.
The programme documents do not change the loan's due dates. Likewise, a lender's acceptance does not establish programme eligibility.
Keeping both workstreams clear makes the proposed relationship easier to assess. It shows which obligations are fixed and which potential receipts remain uncertain.
If you have a secured facility and a separately qualifying position, send the broad facility terms, repayment schedule and proposed programme allocation. We can assess whether there is a coherent basis for further review, without assuming future output will meet the debt.
Borrowing carries repayment and collateral risk. Programme distributions are uncertain and do not guarantee repayment of a secured facility.