The Five Stages
1
Underwriting and Onboarding
Before any capital is committed. The borrower is independently assessed. Under the Credora Path, a three-pillar assessment produces a grade from A+ to D, and a borrower graded below C is not offered a facility. The grade also sets the size of the first-loss buffer.
2
First-Loss Buffer
Before any capital is drawn. The borrower transfers its own capital to the Issuer. Under the Credora Path, the amount is between 10% and 25% of drawn principal, according to the borrower’s grade. No draw is processed beyond what the posted buffer supports. The Issuer owns this capital outright, and it stands ahead of lenders if the borrower defaults. See First-Loss Buffer.
3
Monitoring
Throughout the life of the facility. The vault tracks payment obligations on-chain. Separately, the borrower’s solvency is read approximately every hour through a read-only exchange API and classified into one of four contractual states, each with a defined response. Where supported, solvency statements are attested through Reclaim Protocol and published on-chain for independent verification. See Monitoring.
4
Delinquency and Termination
When an obligation is not met. A payment shortfall stops new draws and deposits and, after a grace period, triggers penalty interest. An Event of Default accelerates the debt. A termination fixes the value of lender positions and begins an orderly wind-down. See Delinquency and Termination.
5
Recovery
After a default. Recoveries are applied in a fixed order: the first-loss buffer, then undrawn funds in the vault, then legal enforcement against the borrower. Lenders share recoveries in proportion to their claims, regardless of when they claim. See How Recovery Works.
What Each Stage Provides
The stages describe the lifecycle of the protections, not a path that every incident must follow. An insolvency, for example, is an immediate Event of Default whatever the most recent monitoring state.
These protections reduce risk and define how a loss is handled. They do not remove the risk of delay or loss. The Risk Disclosure Statement sets out the risks that remain.