Lecture series
Funding a loan book: from equity to securitisation
Every loan is paid out of money the lender must first raise. This course explains the layers of funding behind a loan book: equity, deposits, borrowing from banks, development finance and bonds, and securitisation; how lenders keep what they lend matched with how they are funded; and how a growing lender plans its funding. Eight lessons.
2 of 8 lessons published. Lesson 1 is free to read.
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- 01How a loan book is funded: the layers of fundingA lender can only lend money it has raised. This lesson sets out where that money comes from, the order in which each layer bears losses, why lenders that take no deposits depend on other lenders and investors, and how to judge whether funding will stay in place as long as the loans it pays for.
- 02Equity: the first layer, and how much borrowing it can carryEquity is the money that stands behind every other source of funding. This lesson explains what counts as equity, how leverage is measured, why small-loan portfolios call for more equity than bank portfolios, what minimum capital does, and how fast a lender can grow on its own profits before it needs new owners' money.
- 03Deposits: stable and cheap, but only for licensed institutions
- 04Borrowing from banks: term loans, credit lines, covenants and borrowing bases
- 05Development finance institutions, impact investors and bonds
- 06Securitisation and selling loans
- 07Liquidity and mismatches: maturity, interest rates and currency
- 08A funding plan for a growing lender
Quiz and certificate 5 questions; those on lesson 1 are free to try. Read every published lesson and score 80% or more for a certificate of completion.
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