Loss Provision Fund (LPF) guarantees lenders principal and interest payments. It is backed up by the platform.
Part of the borrower’s interest rate payments goes into the loss-provision fund. These payments depend on the borrower’s trust score—the better the trust score, the smaller the payments into the loss-provision fund.
The loss-provision fund is managed by the SmartCredit.io platform. It is one of the mechanisms that guarantee lenders the principal and interest payments. The platform is the guarantor of the Loss Provision Fund.
This fund accumulates small payments from every loan. It is used in adverse situations—for example, in the case of extreme market crashes, which do not cover the loan values.