A key benefit of the Loan Loss Provision is that it is designed to diversify risk automatically for all investors. This is done by collecting contributions from all borrowers and using those funds to cover missed payments across the whole portfolio; every investor is exposed to all loans on the platform rather than just the loans to which they are directly matched.
The number and risk profile of individual borrowers you are matched against will therefore not affect your returns or losses in any scenario. Your risk is diversified across the whole portfolio whether you lend to 1, 10 or 100+ Growth Street borrowers at once. This means you do not need to worry about manually splitting up your lend orders, or whether your lend orders are matched to multiple borrowers.
This would even be the case if the Loan Loss Provision were to become depleted, as in that case, we would declare a “Resolution Event”. In a Resolution Event, all interest and capital payments made by borrowers would be pooled and distributed amongst investors proportionally.
Your capital is at risk when you lend to businesses. Find out more here.