Sublimit
A sublimit is a cap inside a credit facility on how much of the total commitment can be used for one category of collateral, such as a loan type, a state or loans past a certain age.
How a sublimit works
A facility might have a $15,000,000 commitment but allow only part of it for certain collateral: for example a cap on construction loans, on loans in one state, on loans above a size threshold or on loans that have been on the line past a set number of days. Each of those caps is a sublimit. The Comptroller of the Currency’s handbook on asset-based lending lists “availability sub-limits and reserves” among the tools lenders use to control advances, alongside advance rates and eligibility requirements.
Sublimits sit alongside the borrowing base. A loan can be eligible and still not be fundable because its bucket is already full.
Why it matters to a private lender
Private lenders’ pipelines are often lumpy. If your business shifts toward ground-up construction or a new market and the line caps those loans at a small share, the headline commitment overstates what you can fund. Ask for every sublimit in writing before you sign, and model your actual pipeline mix against them.
Example
Hypothetical. A $15,000,000 line has a 20% sublimit for construction loans, so no more than $3,000,000 of advances can be against construction collateral. A lender with $2,800,000 already drawn on construction loans cannot put a new $600,000 construction loan on the line, even with $8,000,000 of unused capacity.
Compare funding structures on the warehouse line alternative page.
Where Lender Capital fits
Lender Capital places first-lien, business-purpose real estate loans with capital partners. You apply once, then submit each loan with the full file. We send it only to capital partners whose criteria it fits, one partner funds the whole loan at closing and it is assigned to them. You keep your points (less the placement fee), earn the spread above the partner’s rate and service the loan. You pay a placement fee only when a loan funds.
Lender Capital is a business-to-business platform. This page is general information, not legal, tax or securities advice. Terms of warehouse lines and other funding sources vary by provider; confirm them with each provider and your counsel.