Recovery floor
A recovery floor is a minimum share of original equipment cost a lender, lessor or investor is set to recover at named dates even if resale prices fall, subject to the policy’s terms, usually through residual value insurance.
Sizing a balloon on a 20% floor
| Equipment cost | $10.0M |
| Insured floor at maturity | 20% of cost: $2.0M |
| Balloon the floor can support | Up to $2.0M, repaid from the sale |
| Amortized before maturity | $8.0M, from contracted revenue |
Hypothetical. The floor pays only for an eligible sale at a covered trigger date, subject to the policy terms, limits and exclusions.
How it works
A floor under the worst case. Instead of hoping resale covers the balance, the lender fixes a minimum recovery, as a share of original cost, at the dates that matter: a balloon, a covenant test, a lease end.
Insurance does the work. Residual value insurance pays the shortfall if eligible equipment sells below the insured floor at a covered trigger date, provided the sale follows the policy’s disposal process.
Recovery and remarketing come with it. Our Recovery floor (20%+), RVI pairs the floor with recovery and remarketing coordination, so the sale that triggers a claim is run to get the best price first.
What lenders check
Resale can collapse fast: miner prices fell 85% in 2022, and mining lenders that took the machines back, or a quick cash payoff, recovered roughly 35 to 65 cents (what lenders recover).
A known floor lets a lender lend against the residual: a longer amortization, a balloon or a junior tranche that would otherwise rest on a forecast. See the risks, ranked.
Discuss a transaction
Send us the equipment list and the loan or lease you have in mind. We will come back with an indication and the questions we would need answered.
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