Warehouse Financing

Warehouse financing is a form of financing in which manufacturers take loans using their goods or commodities as collateral for the loan. In the context of commodity production or trading, warehouse financing refers to banks making short-term loans to agricultural commodity producers or traders against warehouse receipts, which act as collateral. In the context of securitisation, securitised warehouse financing refers to the provision of secured financing to originators of receivables (through the securitisation SPV) to enable them to purchase receivables ahead of a securitisation. The financing is repaid once the securitisation closes. Security is provided by the receivables. In the US mortgage market, banks can originate mortgages but fund them using proceeds from a warehouse lender rather than their own balance sheet. On sale of the mortgage, the bank repays the warehouse lender but keeps the origination fees paid by the borrower