Warehouse facility
A revolving credit line that a lender uses to fund new loans, secured by those loans, until they are sold, securitized or refinanced.
What a warehouse facility is
A warehouse facility, or warehouse line, is short-term financing that lenders use to hold new loans until they are sold or repaid. The lender pledges the loans as collateral and borrows a share of their balance. When the loans are sold, securitized or paid off, the proceeds repay the line, freeing capacity for more loans.
How it works
The warehouse lender sets eligibility criteria, an advance rate and a borrowing base, the most it will lend against eligible loans. The borrower draws as it funds loans and repays as loans leave the line. Banks and private credit funds both provide warehouse lines.
- 01 · ORIGINATE The lender makes new loans that meet the facility's eligibility criteria.
- 02 · DRAW It pledges the loans and draws a share of their balance from the line.
- 03 · REPAY When loans are sold, securitized or paid off, proceeds repay the line for reuse.
When businesses use it
- Fintech and embedded lending programs funding loan growth
- Private real estate lenders funding bridge and fix-and-flip loans
- Mortgage lenders holding loans before selling them to investors
- Lenders building a loan pool ahead of a securitization
Cross River's Lender Finance platform provides warehouse facilities to private lenders nationwide. Options include revolving lines that fund a portion of bridge loans based on set criteria, and leverage against a single bridge loan. See lender finance at Cross River.