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.

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RELATED FAQS
  1. What's the difference between a secured line of credit and an unsecured line of credit?

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  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 good alternatives to taking out a line of credit?

    Read more about how opening a line of credit might not be the best answer for you and determine available alternatives if ... Read Answer >>
  4. What are some reasons banks deny applications for checking accounts?

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