Loan Basics

In our system, loans are nodes (accounts) with a negative balance. Please look at How Accounts Work Behind the Scenes for more context.

One-time and Revolving loans both use the LOAN-US node but are differentiated by their node statuses. One-time loans have a CREDIT node status (with the ability to allow one disbursement at loan creation) while revolving has CREDIT-AND-DEBIT (to allow for various withdrawals of funds).

Who is the Lender?

Synapse's partner banks will be the lenders for loans. They are willing to lend these funds because the platform will be the guarantor of the loan via the 1:1 collateral provided by the platform's (or user's) reserve account (see below).

If you are interested in learning about the decisioning process please refer to our Loan Decisioning page.

Reserve Account

Reserve Accounts (<<account_reserveUS>>) are accounts held at Synapse's bank partners in the name of the Platform to provide a buffer for Synapse against unforeseen contingencies or capital loss(es) such as transaction returns (learn more on our Reserve Accounts page).

When a platform is interested in implementing a lending program they will need to fund a reserve account with additional funds to cover any defaults from the lending program. You can look at reserve account's balance with View Loan Reserve API call.

It is also possible to have a user node (account) partially or wholly cover the collateral. This is useful for platform's interested in offering a Secured Credit Solution to its users.