A further advance is a new loan that is made to a borrower by the securitisation issuer. This can happen if the borrower needs additional funds, or if the securitisation issuer wants to increase the size of the securitisation pool.
Further advances are typically made by the securitisation issuer, but they can also be made by the originator of the loans that are being securitised. In some cases, the securitisation documentation may allow the borrower to request a further advance directly from the investors in the securitisation.
There are a number of applications for further advances in securitisation. One application is to provide borrowers with additional funds to meet their financial obligations. For example, a borrower may request a further advance to cover unexpected expenses, or to make a down payment on a new property.
Another application for further advances is to increase the size of the securitisation pool. This can be done if the securitisation issuer wants to raise more money, or if it wants to improve the credit quality of the pool.
Here are some other applications for further advances in securitisation:
- To provide borrowers with working capital
- To finance business expansion
- To refinance existing debt
- To provide liquidity to the securitisation market
Further advances can be a useful tool for both borrowers and investors. For borrowers, they offer the advantage of being able to access additional funds when they need them. For investors, they offer the advantage of increasing the size of the securitisation pool, which can improve the credit quality of the pool and the returns to investors.