# Understanding Credit Access

There are two ways of accessing credit:

1. **Individual Credit Access via CreditFacility:** Businesses can borrow directly against 80% of their stablecoin allocation from membership fees. The credit limit is up to a configurable Collateral Factor (up to 70% by default). The borrowing interest rate used is the same as that of JustLend. MintDeals does not earn from this.\

2. **Shared Credit Access via CreditManager:** Businesses can access additional credit based on their credit score, boost factor, and the platform’s available shared credit pool, which is partly funded by 20% of BTC allocations from membership fees.  \
   \
   This credit limit varies and is relational to the total borrows  made by all those using this route  along with the max global credit limit. This is determined by a configurable Collateral Factor (up to 20% of the stored BTC's USD value by default). The borrowing interest rate used by the Credit Manager is higher, due to higher risk and is based on JustLend's interest rate + a configurable interest delta (currently set at 550 Basis Points (\~5.5%)).

**1. Individual Credit Access via CreditFacility:**

`Credit Limit = Stablecoin Allocation * Stablecoin Collateral Factor`

* **Components:**
  * **Stablecoin Allocation:** 80% of the total membership fees collected, in stablecoins (USDT + USDD).
  * **Stablecoin Collateral Factor:** The percentage of the stablecoin allocation that can be borrowed as credit (e.g. 70%).
* **Scenario:**
  * **Total Membership Fees Collected:** $10,000
  * **Stablecoin Allocation (80%):** $8,000
  * **Credit Limit:** $8,000 \* 70% = $5,600
* **Available Credit:**&#x20;
  * `Available Credit = Credit Limit - Outstanding Loan`
  * **Example:** If there is an outstanding loan of $2,000, then `Available Credit = $5,600 - $2,000 = $3,600`.

**2. Shared Credit Access via CreditManager:**

`Credit Limit = Borrowing Capacity * (1 - (totalCreditUsed / maxGlobalCreditLimit))`

* **Components:**
  * **Borrowing Capacity:** Determined by `Credit Score * Borrowing Multiplier BP / 10,000 * Boost Factor`.
  * **Max Global Credit Limit:** The maximum amount of credit available to all users collectively, set by the admin.
  * **Total Credit Used:** The sum of all users' outstanding loans in the shared credit facility.
* **Shared Credit Component:**
  * **BTC Allocation:** 20% of the remaining membership fees after platform fees are subtracted is converted to BTC.
  * **Shared Credit:** 20% of the USD value of BTC allocation is used as shared credit collateral.
* **Scenario:**
  * **BTC Allocation (20%):** $2,000
  * **Shared Credit Available (20% of BTC Allocation + existing shared value):** $400+
  * **Borrowing Capacity:** Assuming the baseline credit score of 500, boost factor of 1 and borrowing multiplier of 20000 BP:
    * `Borrowing Capacity = 500 * 20000 / 10000 * 1 = $1,000`
  * **Credit Limit (after applying global availability):**
    * If `totalCreditUsed = $5,000` and `maxGlobalCreditLimit = $20,000`, then:
    * `Credit Limit = $1,000 * (1 - ($5,000 / $20,000)) = $1,000 * 0.75 = $750`
    * **Available Credit:** This would be further reduced by any individual outstanding loans.

This system allows for flexibility, where businesses with higher credit scores and boosted factors can access more credit via the shared facility, while the direct facility offers a more straightforward borrowing option with lower risk but also lower limits.

To learn more about the Credit Scoring System, see:

{% content-ref url="credit-scoring-system" %}
[credit-scoring-system](credit-scoring-system)
{% endcontent-ref %}
