Ead Calculator

Exposure at Default (EAD) is the amount a lender expects to be owed at the moment a borrower defaults, and for a revolving facility it is almost always more than today’s balance, because a borrower in trouble tends to draw the rest of the line first. This calculator applies the Basel formula used in credit risk and regulatory capital work: it takes your current exposure, works out the undrawn part of the credit limit, converts a share of that undrawn part into expected further drawdown using a Credit Conversion Factor (CCF), and adds the two together. If you landed here looking for the U.S. immigration Employment Authorization Document, this is a different EAD entirely: this page is about bank credit risk, not work permits.

Quick Answer

How to use the EAD calculator

Enter one facility at a time, then click Calculate. The results stay hidden until you do, so you can test several CCF assumptions against the same facility.

1. Current exposure: the amount already at risk on this facility. On a single revolving line, enter the same figure as the drawn amount.
2. Drawn amount: how much of the limit is currently drawn. The calculator subtracts it from the limit to get the undrawn amount.
3. Credit limit: the total committed limit. Keep the drawn amount at or below it, or the undrawn amount and the expected drawdown go negative.
4. CCF: the share of the undrawn amount you expect to be drawn before default, as a decimal from 0 to 1. The Basel standardised values in the table further down are the usual starting point; banks on internal models estimate their own.

The Exposure at Default formula, stated exactly as this tool computes it

EAD is the current exposure plus the CCF-weighted share of the undrawn commitment. That is the whole model, and it is worth stating precisely because simplified write-ups often skip which balance the CCF applies to.

Two things follow from that wording. First, the CCF applies only to the undrawn part, never to the whole limit: a 0.75 CCF on a $100,000 limit with $80,000 drawn converts $15,000, not $75,000. Second, when current exposure and the drawn amount are the same number, which is the normal case for one revolving facility, the formula is exactly the textbook Basel form, EAD = Drawn + CCF × Undrawn, as set out in the Basel Framework chapter CRE20 on the standardised approach. The separate current exposure field exists for cases where the carrying amount at risk differs from the drawn balance, for example where accrued interest and fees are included in the exposure. The Basel Committee’s own explanatory note on the IRB risk weight functions defines EAD in the same spirit: drawn amounts plus likely future drawdowns of undrawn lines.

Worked example: an 80% drawn line with a 0.75 CCF

A corporate borrower has a $100,000 revolving facility, has drawn $80,000, and the lender’s current exposure on the facility is the same $80,000. Based on how similar borrowers behaved before past defaults, the lender expects three quarters of the remaining line to be drawn, a CCF of 0.75.

Where the $100,000 limit sits at default, on these assumptions:

Change only the CCF and the picture shifts fast. At the Basel standardised 40% CCF for ordinary commitments, expected drawdown falls to $8,000 and EAD to $88,000. At a 20% CCF, EAD is $84,000. At 100%, the borrower is assumed to take the whole line and EAD equals the full $100,000 limit. Same facility, same balance, three defensible answers: that spread is why supervisors prescribe CCFs for the standardised approach instead of leaving the number to judgement alone.

Which CCF should you use? The Basel standardised values

Under the standardised approach, the CCF is prescribed by the type of off-balance sheet item, not estimated. The values below are from CRE20 of the Basel Framework; banks using internal ratings-based (IRB) models estimate their own CCFs from defaulted-account data instead, subject to supervisory approval and floors.

The pre-filled 0.75 in the calculator is deliberately not one of these prescribed values. It represents an internal, IRB-style estimate for a committed revolving line whose borrowers historically draw heavily before default, the pattern documented in modelling research such as the MPRA study of EAD and LGD modelling, where observed conversion factors on defaulted revolving accounts often land well above the standardised 40%. If you are doing standardised-approach capital work, replace 0.75 with the prescribed value for your item type. If you are stress-testing, run the calculator at several CCFs and look at the range, not a single point.

Where EAD goes next: expected loss and capital

EAD rarely stands alone. In the Basel expected-loss identity, Expected Loss = PD × LGD × EAD, the EAD from the worked example combines with a probability of default and a loss given default to size the loss a lender should expect, and the same EAD feeds risk-weighted assets and the capital adequacy ratio a bank must hold against the facility. A worked pass: at a 2% PD and a 45% LGD, expected loss on the $95,000 EAD is 0.02 × 0.45 × $95,000 = $855. Get EAD wrong by using today’s $80,000 balance instead, and expected loss drops to $720, an understatement of about 16% that scales across a whole loan book. Facilities with strong collateral change the LGD side of that identity rather than the EAD side, which is why exposure and recovery are modelled separately; the collateral coverage ratio calculator covers the security side, and the bank risk-based capital calculator shows where the resulting risk-weighted figure lands in the capital stack.

What competing EAD pages miss

Most pages ranking for EAD are explainers, not tools, and the few calculators that exist tend to hide the one decision that drives the answer.

• No working tool at all: the top-ranking guides state the formula and one canned example, then stop. You cannot test your own facility, your own limit, or a second CCF against them.
• The current exposure trap: many write-ups say “EAD = drawn + CCF × undrawn” without saying what happens when the carrying exposure differs from the drawn balance. This tool keeps the two fields separate and labels exactly what each one does.
• No utilization: two facilities with the same EAD behave very differently at 30% and 95% utilization. This calculator reports utilization alongside EAD and flags thin headroom, because utilization is the early-warning number risk teams actually watch.
• CCF with no provenance: pages that do offer a CCF rarely say whether it is a prescribed standardised value or an internal estimate. The table on this page ties every standard CCF to its CRE20 item type, and states plainly that the pre-filled 0.75 is an internal-style assumption.

Limits of this calculator, stated plainly

This is a single-facility, single-CCF model. It does not estimate the CCF for you, does not apply supervisory CCF floors or downturn adjustments, and does not net collateral, guarantees or provisions against the exposure: under Basel, EAD is measured gross, and those mitigants belong in LGD and capital, a distinction the LegalClarity guide to Exposure at Default also draws. It covers one facility at a time, so a borrower with five lines needs five runs (or one run per facility type, using the matching prescribed CCF). Two input cautions: the credit limit must be above zero, because utilization divides by it, and if the drawn amount exceeds the limit the undrawn amount goes negative and EAD falls below current exposure, which is the arithmetic telling you the inputs are inconsistent. For a term loan with no right to draw further, the honest EAD is simply the outstanding balance: set the undrawn amount to zero by making the limit equal the drawn amount, or read the annual loss expectancy calculator if what you actually need is a yearly loss figure for operational risks rather than a credit exposure.

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