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AgridianDairy KB

Borrowing base certificate (BBC)

Definition

Section titled “Definition”

A borrowing base certificate (BBC) is the report a borrower delivers to its lender, usually monthly, that computes the borrowing base and availability as of a period-end date and certifies that the figures are true. It is signed by an officer or owner of the borrower, and the lender relies on it to permit draws.

A complete package usually has:

  1. The certificate: one page listing each collateral line with gross, ineligibles, eligible, advance rate and line value; deductions; the borrowing base; the loan balance and accrued interest; and availability (excess or deficit).
  2. Supporting schedules per line: cattle by class with head and unit values; hedged vs unhedged split (see hedge coverage); A/R and A/P aging (see A/R and A/P aging); milk check; feed and crop inventory.
  3. Herd inventory roll-forward by class, reconciled to the census (see herd inventory roll-forward).
  4. Adjustments schedule: intercompany eliminations, accrued-interest offset, contras and other reason-coded changes (see intercompany eliminations).
  5. Sign-off: certification statement, signer, date, and often a covenant compliance section.

A certificate for a closed period is not edited after delivery. A correction is a restated certificate that references the one it replaces and the reason.

How to pull it in DC305

Section titled “How to pull it in DC305”

DC305 feeds the cattle sections only:

Pull them as of period end, not the run date, and allow for events entered a day or two after month end.

Other sections come from the accounting system (aged detail, inventory), the milk statement, the broker and insurance agent (hedge positions) and the lender’s loan statement (balance and accrued interest).

Typical range

Section titled “Typical range”

Herd context: US dairy operating lines; reporting terms vary by lender and loan agreement.

  • Cadence: monthly is most common; quarterly for some lower-risk lines; weekly or with each draw for stressed or larger asset-based credits.
  • Due date: roughly 15–30 days after period end.
  • Field exams / inspections: periodic lender inspections or herd counts, often annually, to test the certificate against the animals.

Common mistakes

Section titled “Common mistakes”
  • Mixed as-of dates across schedules.
  • Schedules that don’t tie to the certificate lines (e.g. aging detail total ≠ A/R gross on the certificate).
  • Opening counts that don’t match the prior certificate’s closing.
  • Editing a delivered certificate instead of issuing a restatement.
  • Unexplained census residuals in the roll-forward.
  • Missing adjustments: intercompany balances or the accrued-interest offset left in.
  • Signing before the close is reviewed. The signer is certifying accuracy.
Section titled “Related”