---
title: "What Is Warehouse Line?"
term: "Warehouse Line"
description: "A warehouse line is a revolving credit facility that funds a pool of assets — usually loans or receivables — until they are sold or securitized into longer-term funding."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/warehouse-line
---

# What Is Warehouse Line?

> A warehouse line is a revolving credit facility that funds a pool of assets — usually loans or receivables — until they are sold or securitized into longer-term funding.

**A warehouse line** is revolving debt that finances newly originated assets on your balance sheet until permanent funding replaces the warehouse lender.

### How it works

Key terms founders negotiate:

- **Advance rate:** percent of eligible receivable/loan balance funded (often 80–95% depending on asset quality)
- **Eligible assets:** credit boxes, geography, tenor limits
- **Covenants:** delinquency triggers, minimum equity, concentration caps, monthly reporting
- **Takeout:** requirement to securitize or sell within facility tenor

Example: a SMB lender originates $10M monthly in loans. A warehouse line at 90% advance provides $9M liquidity per cohort, recycled as principal pays down. When pools reach $100M, an ABS issuance repays the warehouse and sets up the next cycle.

Multiple warehouse banks may participate — senior and mezz tranches. Cost is SOFR plus spread plus unused fees. Personal guarantees appear in early-stage facilities but fade with scale.

### Why it matters

- **Founders:** Line headroom caps originations — equity raises often precede warehouse upsizes. Covenant breaches freeze funding and force portfolio shrink.
- **Investors:** Underwriting quality shows in warehouse audits. Strong ABS takeout history lowers future spread; weak performance closes facilities.

### Common mistake

Scaling marketing before warehouse capacity is committed. Originations without funding force fire sales of loans at bad prices.

### Related ideas

See also [warehouse deal](/glossary/warehouse-deal), [warehousing](/glossary/warehousing), and [working capital](/glossary/working-capital).

## FAQ

### What is a warehouse line in simple terms?

It is a bank or specialty lender credit facility that advances cash against eligible loans you originate — you repay as those loans are packaged into bonds or sold to another investor.

### Why does a warehouse line matter?

For lending founders, it is the fuel for originations before ABS takeout. For equity investors, line size, covenants, and bank confidence signal whether scale plans are fundable.


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Source: https://venturecapitaltracker.com/glossary/warehouse-line