DEFINITION of 'Credit Sleeve'

A form of credit agreement, backed by physical assets, where the lending party will provide working capital and collateral to another company, known as the "sleeve provider". The lending party will essentially co-guarantee certain outstanding credit arrangements the sleeve provider has with other lenders and increase the overall credit quality of the sleeve provider.

BREAKING DOWN 'Credit Sleeve'

This type of working capital loan is most often found within the energy industry, where sleeves are backed by physical energy assets and carry certain cash flow requirements for the sleeve provider to continue to operate. Credit sleeves are often set up when a company has seen its credit quality decline and access to traditional forms of debt financing has run dry.

RELATED TERMS
  1. Trade Credit

    An agreement where a customer can purchase goods on account (without ...
  2. Credit Rating

    An assessment of the creditworthiness of a borrower in general ...
  3. Credit Enhancement

    A method whereby a company attempts to improve its debt or credit ...
  4. Available Credit

    The unused portion of an open line of credit, such as a credit ...
  5. Credit Derivative

    Privately held negotiable bilateral contracts that allow users ...
  6. Credit Report

    A detailed report of an individual's credit history prepared ...
Related Articles
  1. Investing

    Cash Flow Lending Vs. Asset-Based Lending

    When companies need financing, they rely on two primary forms of lending: cash flow-based and asset-based lending. We look at the pros and cons of each.
  2. Small Business

    How To Increase Your Appeal To Prospective Lenders

    Making a business eligible for loans/credit cards at the best possible rates requires crafting an excellent credit profile through the smart use of credit.
  3. Investing

    Revolving Credit vs. Line of Credit

    Revolving credit and a line of credit are arrangements made between a lending institution and a business or individual.
  4. Small Business

    Why Your Family Business Needs a Succession Plan

    It is important to have a succession plan in place for your family business.
  5. Personal Finance

    A Good Credit Score: Why Do You Need It?

    Your credit score can affect your ability to borrow money, buy a house or even get a job.
  6. Personal Finance

    The Basics Of Lines Of Credit

    Lines of credit are potentially useful hybrids of credit cards and normal loans. Learn how a line of credit can help (and hurt) your finances, and how to find the best one to suit your needs. ...
  7. Personal Finance

    6 Ways To Build Credit Without A Credit Card

    It's definitely possible – if a bit more complicated – to build a credit history without traditional credit cards. Just follow these steps.
  8. Personal Finance

    How To Overcome Bad Credit

    Some lenders can look overlook your credit score and assess other factors that fairly determine if you are a reasonable credit risk.
  9. Personal Finance

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  10. Personal Finance

    Take the Right Steps to Build Excellent Credit

    There are several things you can do to protect and improve your credit score.
RELATED FAQS
  1. What's the difference between a secured line of credit and an unsecured line of credit?

    Discover the differences between a secured line of credit and an unsecured line of credit, and why lenders treat the two ... Read Answer >>
  2. What are the differences between revolving credit and a line of credit?

    Understand how to differentiate between a line of credit and a revolving credit account, and find out why business owners ... Read Answer >>
  3. What are some reasons banks deny applications for checking accounts?

    Understand what a revolving credit account is and what a general line of credit is, and learn the differences between the ... Read Answer >>
  4. Do all banks use the Five Cs of Credit when evaluating potential borrowers?

    Understand how lenders analyze a new credit application from a borrower, and learn why the five Cs of credit are an important ... Read Answer >>
  5. What information do lenders need when I apply for a credit limit increase?

    Increase your credit limit by making sure your current credit is paid on time and by paying the largest amount you can afford ... Read Answer >>
Hot Definitions
  1. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  2. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  3. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  4. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
Trading Center