Institutional Loan is a sophisticated financial product designed for professional users. It facilitates peer-to-peer lending with fixed interest rates over a set 90-day term. This structure offers borrowers both predictability in their financing costs and stability throughout the loan period. The platform matches borrowing requests with available lending orders, automating the entire process.
What is an Institutional Loan?
An Institutional Loan provides access to capital at a fixed annual percentage rate (APR) for a fixed 90-day period. This setup ensures that interest costs remain constant, allowing for precise financial forecasting. The mechanism operates on a peer-to-peer model, seamlessly connecting lenders and borrowers.
The platform sets the APR based on comprehensive market analysis. Borrowers place orders on the Institutional Loan order book, specifying their desired amount. Lenders, meanwhile, place their orders on a separate Simple Earn Fixed order book. The system then matches these orders.
Once a match is found, the platform verifies the borrower's Margin Ratio (MR). If this ratio meets the required Initial Margin Ratio (IMR), the loan amount is immediately deposited into the borrower's account. The full interest for the term is charged upon maturity.
Key Advantages of Institutional Loans
This financial solution offers several distinct benefits for institutional players:
- Leverage: Access under-collateralized loans with leverage of up to 2.5x.
- Immediate Access: The borrowed amount is added directly to your account balance upon successful matching and verification.
- Predictable Terms: Benefit from a fixed interest rate and a fixed 90-day term, ensuring both liquidity stability and clear cost expectations.
- Flexible Risk Management: Loan risk is measured by the margin ratio of a user-defined risk unit, which can include any number of main and sub-accounts.
Institutional Loan Overview
Before proceeding, it's crucial to understand the core parameters of this service:
- Eligible Users: Access is restricted to whitelisted users.
- Minimum Borrowing Amount: The minimum loan size is 1,000,000 USDT.
- Supported Cryptocurrency: Loans are currently only available in USDT.
- Term: All loans have a fixed duration of 90 days.
- Maximum Leverage: Users can access up to 2.5x leverage.
- Collateral: The available collateral is the sum of the user's eligible assets in the main account containing the liability and all sub-accounts within the defined risk unit.
- Disbursement: The loan is disbursed to the delegated main account within the selected risk unit.
👉 Explore more strategies for institutional borrowing
How to Borrow Using Institutional Loan
The borrowing process is streamlined into a few key steps.
Get Whitelisted
Your account must be whitelisted before you can place a borrowing order. This is determined on a case-by-case basis. You will need to contact the platform's Business Development team to initiate this process and ensure your eligibility.
Place Your Borrowing Order
Once whitelisted, you can place an order. Set your desired borrowing amount based on the prevailing market APR and the value of your available collateral. When you confirm the order, the total interest is recorded as a contingent liability. Withdrawal restrictions will also be applied based on the margin ratio requirements.
Wait for Order Matching
Your borrowing request is then split into sub-orders and matched with available lending orders on the platform. After a successful match, the system will verify your Margin Ratio (MR) against the Initial Margin Ratio standard. If it meets the requirement, the matched funds are transferred to your funding account. At this point, both the principal borrowed and the total interest are recorded as a formal liability.
Understanding Interest and Fees
Grasping how interest is calculated is vital for effective financial planning.
How Interest is Charged
Interest for the standard 90-day term is calculated using a simple formula:
Interest = Borrowing Amount × Interest Rate × 90 / 365
Interest begins to accrue as soon as the loan amount is drawn down. It is calculated as a liability within your risk unit from that moment and must be repaid in full along with the principal on the maturity date.
Example Calculation:
- Borrowing amount: 1,000,000 USDT
- Matched interest rate: 6%
- Loan term: 90 days
Interest = 1,000,000 USDT × 6% × 90 / 365 = 14,794.5205 USDT
Overdue Fees
Failing to repay on the maturity date will result in your loan being marked overdue. An extra overdue interest fee will be charged on an hourly basis at a significantly higher APR.
Example Overdue Calculation:
- Loan amount: 1,000,000 USDT
- Term: 90 days
- Interest rate: 6%
- Overdue APR: 30%
- Overdue period: 9 hours 50 mins (rounded up to 10 hours)
Overdue fee = 1,000,000 USDT x 30% x 10 / 24 / 365 = 342.4658 USDT
Total repayment amount = Total interest + overdue interest = 15,136.9863 USDT
Repayment Options
You have several avenues for repaying your Institutional Loan.
Repayment at Maturity
You can manually repay the loan at the sub-order level. If you initiate repayment within the last 24 hours before maturity, any remaining interest for the full hours left until maturity will not be charged.
Early Repayment
Choosing to repay your loan more than 24 hours before the maturity date incurs an extra prepayment fee. This fee is equivalent to 100% of the residual interest that would have been accrued.
Overdue Repayment
If a loan becomes overdue, the aforementioned overdue interest will be charged. Should a loan remain overdue for more than 14 days, a forced liquidation is triggered. This process may involve the automatic sale of your collateral and other assets within the risk unit to settle the outstanding liability, potentially resulting in losses. Therefore, overdue loans should be repaid immediately.
The Rollover Process
A rollover function becomes available 7 days (168 hours) before your current loan matures. Selecting this option for a specific loan initiates the following process:
- A new borrowing order is created for the same principal amount.
- The interest for your current 90-day term is frozen in your funding account. This amount is deducted once the new order is successfully matched.
- An additional 14 days worth of interest is frozen to cover any potential overdue period between the maturity of the current order and the start of the new order's term, calculated at the 30% overdue APR.
- If the new order is successfully matched, its principal substitutes the principal of the expiring loan.
If, after 14 days post-maturity, the new order is only partially matched, only that matched portion is advanced as a new loan. If it is wholly unmatched, no new loan is advanced.
Risk Control Framework
A robust risk management system is central to the Institutional Loan product.
Risk Units and Forced Repayment
Borrowers must define a Risk Unit, which is a cluster comprising their main account and any number of their sub-accounts (or no sub-accounts). The main account can be included or excluded from the unit. If excluded, a sub-account must be designated as the delegated main account for service provision. Each account can only belong to one Risk Unit.
The platform monitors the overall risk level of each loan exclusively by reference to the nominated Risk Unit. All Margin Ratio calculations are based on the assets within this unit. Borrowers are responsible for actively managing the risk levels of all accounts in their Risk Unit.
Margin Ratio Calculation
Risk is monitored through a Margin Ratio percentage (MR%).
- Margin Ratio (MR%): This is the key metric for assessing risk. The formula is:
MR% = (Total Discounted Assets of the Risk Unit - Total Liabilities of the Risk Unit) / Total Liabilities of the Risk Unit - Total Discounted Assets: This is the sum of the discounted value of all assets within every account in the Risk Unit. Each asset type is multiplied by a specific discount rate and tier, then converted to USDT. Negative asset values are included at their full, undiscounted value.
- Total Liabilities: This is the sum of all liabilities (principal + interest + other amounts owed) across the entire Risk Unit.
Risk Control Rules
The platform enforces automatic rules based on the Margin Ratio:
- MR% = 40%: This is the minimum Initial Margin Ratio (IMR) required to open a new loan position.
- MR% ≤ 40%: Assets cannot be withdrawn or transferred out of the Risk Unit.
- MR% ≤ 30%: Triggers a margin call, requiring the borrower to take action to avoid liquidation.
- MR% ≤ 17%: A liquidation warning is issued.
- MR% ≤ 15%: Forces the liquidation of assets to pay down liabilities to zero or until no assets remain.
These rules apply unless superseded by a specific agreement. Borrowers can monitor their MR% directly on the platform interface.
👉 Get advanced methods for calculating your margin ratio
Frequently Asked Questions
Who is eligible for an Institutional Loan?
Access is exclusively available to whitelisted institutional users. Eligibility is determined on a case-by-case basis through direct contact with the platform's Business Development team.
What happens if I cannot repay my loan on time?
If you fail to repay on the maturity date, the loan becomes overdue and incurs a high overdue interest fee (30% APR). If the loan remains overdue for more than 14 days, forced liquidation of your collateral is triggered to recover the outstanding amount.
Can I repay my loan early?
Yes, you can repay your loan early. However, if you do so more than 24 hours before the maturity date, you will be charged a prepayment fee equivalent to 100% of the residual interest that would have been accrued.
How is the interest rate for my loan determined?
The platform sets the APR based on prevailing market conditions, taking into account various liquidity and risk factors. Borrowers place orders at this set rate.
What is a Risk Unit and why is it important?
A Risk Unit is a cluster of your main and sub-accounts that you define. It is crucial because your loan's Margin Ratio—the key metric for risk and liquidation—is calculated based on the collective assets and liabilities within this unit, not on individual accounts.
What assets can be used as collateral?
Collateral is calculated from the sum of your eligible assets in the accounts within your Risk Unit. The value of each asset is discounted according to its type and tier. Specific discount rates and eligible assets are detailed on the platform.