Provision Fund

A provision fund is a type of investor protection measure. It consists of money that a P2P lending platform sets aside to cover potential future losses and works as a buffer to smooth out investors’ earnings. A provision fund usually holds cash collected from borrowers or investors as a share of the project value. This way, the size of the fund grows proportionally to the growth of the overall portfolio. Once your loan defaults, you can count on the platform to cover a part of the loss from the provision fund. Read more about how provision funds protect your investments in our guide to provision funds in P2P lending.