loan-sizing - MediaHedge Underwriting Knowledgebase

# Loan Sizing MediaHedge's sizing method is a constraint system. Underwriting first converts headline collateral into eligible net value, then applies asset-specific advance rates, concentration limits, aggregate leverage, budget exposure, tenor and liquidity tests. > [!tip] Decision Point > The approved commitment is the lowest amount permitted by every applicable test. ![[assets/diagrams/loan-sizing-waterfall.svg|Conceptual waterfall from headline collateral value to the lowest permitted loan commitment]] *Conceptual view: the waterfall shows the order of the tests, not transaction data or currently approved policy limits.* ## Sequence 1. **Eligibility:** verify ownership, enforceability, assignment, obligor quality, conditions, deductions, timing and absence of overlap. 2. **Asset-level advance:** apply a haircut appropriate to the asset's certainty and volatility. 3. **Concentration:** limit any single risk component or common failure driver. 4. **Aggregate ceilings:** apply the overall LTV and gross loan-to-budget caps. 5. **Term and liquidity:** align maturity with stressed collection timing, required reserves and extension risk. 6. **Full-financing reconciliation:** confirm through [[wiki/concepts/full-financing|Full Financing]] that the sized facility, equity and other sources still fund every use through delivery. ## Policy Application | Test | Public Decision Framework | | --- | --- | | Tax-credit advance | Apply the current asset-specific rule to verified eligible value after program, timing and realization adjustments | | Gap advance | Apply the current asset-specific rule to a supported low case after rights, market and collection adjustments | | Gap concentration | Test uncertain and correlated exposure against current concentration-review and approval requirements | | Aggregate leverage | Apply current approved ceilings only after collateral eligibility and legal reachability are established | | Budget exposure | Compare total exposure with the approved production budget without treating the ratio as a substitute for full financing | | Term and liquidity | Align maturity, reserves and extension capacity with stressed collection timing | > [!warning] Evidence Limitation > Exact thresholds and exception authorities are internal, versioned controls and are intentionally not reproduced here. Use current approved policy and transaction documents. The [[wiki/syntheses/policy-rails-and-control-matrix|Policy and Control Guide]] explains how the tests interact. ## Required Output A finance expert should be able to reproduce the commitment from the collateral schedule and identify: - eligible net value by asset; - permitted exposure by sizing test; - the binding constraint and remaining cushion; - the effect of stress on value, timing and principal recovery; - pricing, risk score and approval status as separate outputs; - every exception and its approval authority. ## Collateral States Matter An executed [[wiki/concepts/pre-sales-collateral|pre-sale]] can produce a contractual receivable after delivery and acceptance. [[wiki/concepts/gap-collateral|Gap collateral]] begins as market-dependent unsold-rights value and may later convert into receivables as licenses are signed. The two states should not receive the same eligibility assumptions, advance treatment or concentration credit. ## Limits and Failure Modes Aggregate LTV does not protect capital if the value is ineligible, correlated, unreachable or maturing after the loan. Gross loan-to-budget is not a substitute for [[wiki/concepts/full-financing|sources-and-uses sufficiency]]. Fees and capitalized interest can increase exposure after closing. A gap cap calculated against a final loan that itself contains gap creates circularity and must be solved and audited explicitly. High pricing cannot cure a failed structural gate. ## Continue Exploring [[MediaHedge Knowledgebase|Home]] · [[wiki/syntheses/financier-diligence-route|Financier’s Guide]] · [[wiki/syntheses/credit-lifecycle|Credit Lifecycle]] · [[wiki/syntheses/site-navigator|Site Navigator]]