Upsizing and facility expansion

Your warehouse facility is working. Origination volumes are up, performance is clean, and you’re consistently drawing 80%+ of your commitment. Now you need more capacity.

This topic covers when to request an upsize, how to structure the conversation with your lender, what you need to prepare, and how to navigate the most common issues that arise during facility expansion.

When to request an upsize

The primary trigger is simple: you’re consistently drawing 80%+ of your facility for three or more months and have visibility into continued growth. Running at high utilization limits your flexibility and creates refinancing risk if your lender needs to reduce exposure.

Beyond utilization, you’re ready for an upsize when:

Origination pipeline supports larger volume. You have signed partnerships, channel expansion, or proven unit economics that justify the growth.
Current facility is performing within covenant thresholds with headroom. Not just in compliance, but comfortably within limits.
Relationship with your lender is established. Six or more months of clean reporting with no surprises.
Operational infrastructure can handle larger volumes. Servicing capacity, reporting systems, and compliance resources are ready.

When not to request an upsize

Timing matters. Don’t request an upsize:

Right after you’ve tripped a trigger or received a waiver
When your performance metrics are trending down, even if still within covenants
When you don’t have the origination pipeline to utilize additional capacity
When your relationship with the lender is strained

The worst outcome is requesting an upsize and getting turned down or getting terms that signal lender concern. If there’s any doubt about your position, wait until you’ve built more track record.

The 6-month Rule

Start the conversation with your lender at least six months before you need additional capacity. Upsize processes typically take two to four months from initial conversation to funding. You don’t want to negotiate from a position of desperation while running at 95%+ utilization.

Note: Lenders prefer to upsize performing facilities with happy borrowers. If you’re at 85% utilization with clean performance, you have leverage. If you’re asking for more money while explaining why your delinquency rate spiked, you’re negotiating from weakness.

Upsize vs. new facility

Before approaching your lender, decide whether you want to expand the existing facility or establish a new one. The answer isn’t always obvious.

When to upsize the existing facility

Your lender relationship is strong
Current terms are still competitive
Incremental capacity needed is within lender’s appetite (typically 25-100% of current commitment)
You don’t want to add operational complexity
The assets you’re financing fit within existing eligibility criteria

When to add a new facility instead

You want to diversify lender exposure
A new asset type or product doesn’t fit existing eligibility criteria
Your existing lender is at capacity or has reduced appetite
Significantly better terms are available in the market
You want competitive tension to improve pricing
Structural limitations in the existing facility are expensive to amend

When to do both

Sometimes the answer is parallel facilities. This makes sense when:

Different asset classes or risk profiles warrant separate structures
Scale justifies the operational overhead
You want backup capacity if one lender pulls back

Comparing the economics

Factor	Upsize Existing	New Facility
Legal costs	$75K-$200K	$200K-$500K+
Timeline	4-8 weeks	8-16 weeks
Operational complexity	Minimal	Significant
Pricing leverage	Limited	Higher
Lender diversification	None	Yes

For most originators, upsizing the existing facility is the default choice unless there’s a specific reason to go elsewhere.

What lenders need to approve an upsize

Come prepared. Lenders will want updated information across five areas:

1. Performance track record

This is the most important factor. Lenders want to see:

Six to twelve months of facility history with clean performance
Current portfolio metrics within covenant thresholds (ideally with meaningful headroom)
No recent trigger events, waivers, or amendments
Actual vs. projected performance comparison from original underwriting

If your actual performance is better than what you projected at closing, lead with that. It demonstrates both credit quality and forecasting accuracy.

2. Updated collateral analysis

Current loan tape with full stratification
Static pool performance data updated from original underwriting
Vintage analysis showing consistent performance across cohorts
Any changes to underwriting criteria since facility inception (and why)

3. Financial condition

Updated audited financials (or most recent quarterly)
Covenant compliance certificate showing current standing
Liquidity position and runway
Any material changes to corporate structure or ownership

4. Growth justification

Don’t just say you want more capacity. Explain:

Origination pipeline and volume projections
What’s driving the growth (new channels, products, markets)
Evidence that unit economics support the expansion
Updated business plan if growth trajectory has changed

5. Operational readiness

Lenders worry about originators growing faster than their infrastructure. Address:

Servicing capacity (can you handle the volume?)
Systems and reporting infrastructure
Compliance and risk management capabilities
Staffing plans

What triggers deeper scrutiny

Expect more questions and a longer process if:

You’re requesting more than 2x current commitment
You’ve had any covenant breach in the last 12 months
You’ve made material changes to origination guidelines
Key personnel have departed
Your corporate financial condition has weakened

None of these are necessarily deal-breakers, but you’ll need to address them directly.

Accordion features

An accordion is a pre-negotiated right to increase facility size at pre-agreed terms without full re-underwriting. If you negotiated one at closing, upsizing becomes much simpler.

How accordions work

Standard accordion terms include:

Size: Typically 25-50% of initial commitment
Exercise conditions: No event of default, continued covenant compliance, sometimes minimum utilization of existing commitment
Exercise period: Often available during years one and two; may expire after a certain date
Pricing: Either locked at original pricing or subject to market adjustment
Documentation: Exercise notice plus basic representations; minimal negotiation

Committed vs. uncommitted

Type	What You Get	What It Costs
Committed	Guaranteed capacity	Commitment fee on undrawn accordion (typically 25-50 bps annually)
Uncommitted	Option to request; lender can decline	No fee, but no certainty

Illustrative pricing. See pricing disclaimer.

A committed accordion costs money but gives you certainty. You’re paying for optionality. An uncommitted accordion is free but provides only the right to ask.

When to negotiate an accordion at closing

Consider building in accordion rights when:

You expect to need the capacity but want to start smaller
Market conditions are favorable and you want to lock in terms
Your lender may be harder to engage later
The incremental legal cost at closing ($10K-$25K) is worth the optionality

Accordions make less sense when you’re uncertain about growth trajectory, the lender won’t commit to a committed accordion anyway, or your credit profile is likely to improve (making future terms better than what you’d lock in today).

Pricing considerations

Set realistic expectations: upsizes rarely come with better pricing unless market conditions or your credit profile have materially improved.

When pricing might tighten

Strong facility performance well within covenants
Market spreads have compressed since original closing
Your credit profile has improved (rating upgrade, larger scale, better financials)
Competitive pressure from other lenders
Lender wants to deepen the relationship

When pricing will likely widen

Performance at or near covenant thresholds
Market spreads have widened
Incremental commitment takes lender to uncomfortable concentration
Incremental collateral is different quality than original pool
Your financial condition has weakened

Flat pricing is most common

For a performing facility with stable market conditions, expect pricing to stay flat. The lender’s return is acceptable; there’s no reason to reprice. Neither party has significant leverage.

Common upsize fees

Amendment/upsize fee: 25-50 bps on incremental commitment (one-time)
Structuring fee: Sometimes waived for existing clients; 25-100 bps if charged
Legal costs: Paid by borrower; expect $75K-$200K depending on complexity

Positioning for better pricing

If you want tighter pricing, you need leverage:

Demonstrate performance above expectations
Bring market comps showing tighter pricing for similar deals
Offer something of value (longer commitment, additional business)
Run a parallel process with alternative lenders (carefully, to avoid damaging the relationship)
Time the request when the lender needs to deploy capital

Documentation requirements

The documentation burden depends on whether you’re making structural changes.

Standard upsize (no structural changes)

Amendment to credit agreement: Modifies commitment amount, may update schedules
Updated representations and warranties: Bring-down of original reps
Updated officer’s certificate: Authority to enter into amendment, no material adverse change
Updated legal opinions: Enforceability, no conflicts (may be waived for small upsizes)
Updated UCC financing statements: If collateral pools or entities change

Upsize with structural changes

All of the above, plus:

Amended eligibility criteria (if expanding collateral types)
Updated borrowing base mechanics (if changing advance rates or concentration limits)
Amended covenants (if negotiating changes)
Rating agency confirmation (for rated facilities)
Updated investor consent (for syndicated facilities with participation thresholds)

Structural changes add weeks to the timeline and significant legal cost. Avoid them unless necessary.

Timeline and process

A typical upsize takes 5-10 weeks. Here’s the breakdown:

Week 1-2: preparation and initial conversation

Gather your updated financials, performance data, and growth projections. Have an informal conversation with your relationship manager to gauge appetite. Identify any potential issues early.

Week 3-4: formal request and term sheet

Submit your formal upsize request with supporting materials. The lender reviews and routes through their credit process. You negotiate the term sheet covering pricing, fees, and any structural changes.

Week 5-8: credit approval

The lender prepares a credit memo and takes it through internal committee review. IC approval may require multiple levels depending on size. You finalize the term sheet with any IC conditions.

Week 9-12: documentation and closing

Draft the amendment and ancillary documents. Negotiate documentation if there are structural changes. Complete legal review and sign-off. Close and fund.

Expedited timeline (4-6 weeks)

Possible when:

Upsize is within a pre-negotiated accordion
No structural changes required
Lender has delegated approval authority
Strong relationship and clean performance

Extended timeline (12-16 weeks)

Happens when:

Structural changes require extensive negotiation
Rating agency involvement is required
Syndicate consent is needed
Credit issues need resolution first
Lender has capacity constraints

Adding new lenders

Sometimes your existing lender can’t or won’t provide the full upsize amount. Adding new lenders is an option, but it adds complexity.

When it makes sense

Existing lender can’t provide full upsize
You want to reduce concentration risk
New lender offers better pricing on incremental portion
You’re preparing for a larger syndicated facility

Mechanics

Assignment of existing commitment: Your existing lender sells a portion of their commitment to the new lender. The new lender steps into existing terms. Common in broadly syndicated facilities.

Incremental facility: New lender provides additional commitment alongside existing. May be on same or different terms. Requires intercreditor agreement if terms differ.

Full syndication: Facility restructured with multiple lenders from the start. Lead arranger syndicates to others. More complex; appropriate for larger facilities ($100M+).

Key considerations

Consent requirements: Most credit agreements require existing lender consent. Understand the threshold.
Most Favored Nation (MFN): New lenders may want pricing at least as good as existing, triggering repricing discussions.
Voting and control: How are decisions made with multiple lenders? Understand majority and supermajority thresholds.
Agency and administration: Who acts as administrative agent? Typically the lead or largest lender.
Intercreditor issues: If the new lender has different terms, you need clear subordination or pari passu documentation.

Common upsize issues

Lender doesn’t have appetite

What it looks like: Polite but noncommittal responses. Long delays in getting a term sheet. Internal credit pushback you hear about secondhand.

Why it happens: The lender is at concentration limits, sector appetite has changed, or your facility isn’t a priority.

How to address it:

Ask directly about constraints and appetite
Explore a smaller upsize that fits their limits
Start a parallel process with alternative lenders
Consider bringing in a new lender to share the commitment

Performance is borderline

What it looks like: You’re within covenants but without much headroom. The lender focuses on trend rather than absolute levels.

Why it happens: Metrics that were fine at $50M start looking different at $100M. Portfolio seasoning reveals issues that weren’t visible earlier.

How to address it:

Address performance questions head-on with data and context
Show what you’re doing to improve metrics
Offer tighter covenants or additional enhancement if needed
Consider waiting two to three months to build better track record

Pricing deteriorates significantly

What it looks like: Upsize terms are 50-100 bps wider than original. It feels like a different deal.

Why it happens: Market conditions changed, your risk profile changed, or the lender is pricing to exit.

How to address it:

Understand the driver (market vs. your credit vs. lender-specific)
Get competing bids to pressure pricing
Accept moderate widening if terms are still competitive vs. alternatives
Walk away if pricing makes the economics unworkable

Timeline keeps slipping

What it looks like: A commitment to close “in four weeks” becomes eight, then twelve, then indefinite.

Why it happens: Lender internal capacity constraints, competing priorities, unresolved credit issues, or documentation complexity.

How to address it:

Get specific dates and milestones in writing
Escalate to senior relationship contacts
Identify and address blockers directly
Have a backup plan (alternative lenders, bridge financing)

Structural changes required

What it looks like: The lender won’t upsize without tighter covenants, additional collateral, or changed terms.

Why it happens: The original structure was appropriate for a smaller size. Incremental risk requires incremental protection.

How to address it:

Understand what’s driving the request (legitimate risk concern vs. negotiating tactic)
Negotiate limited changes that address specific concerns
Push back on broad structural changes that weren’t contemplated originally
Model the economics with proposed changes to ensure the deal still works for you

Practitioner checklist

Before approaching your lender

Current utilization consistently above 75% for 3+ months
All covenants in compliance with reasonable headroom
No trigger events or waivers in past 6 months
Updated financials ready (audited if available)
Current loan tape and performance stratification prepared
Growth projections documented with supporting evidence
Internal approval obtained

Initial lender conversation

Informal temperature check with relationship manager completed
Confirmed lender has appetite and capacity
Understood any concerns or prerequisites
Aligned on rough timing and process
Identified any structural changes lender will require

Term sheet phase

Submitted formal upsize request with materials
Reviewed term sheet against original facility terms
Identified any pricing or structural changes
Negotiated key terms (pricing, fees, covenants)
Confirmed timeline and milestones

Documentation phase

Engaged legal counsel
Reviewed amendment for accuracy
Confirmed no new onerous provisions
Updated all required schedules and exhibits
Coordinated UCC and other filings

Closing

Executed all documents
Confirmed funding mechanics
Updated internal systems for new commitment
Communicated changes to relevant teams
Confirmed any new reporting requirements