Participation Loan Servicing

Participation loans allow lenders to diversify their loan portfolios and avoid over-exposure in one particular industry or economic segment. If a large loan may upset a lender's diversification strategy, the lender can recruit partner lenders (participants) to share in the risk. On the flip side, a lender with small capital assets may have difficulty lending out enough to keep its loans diversified. Participation loans allow this lender to diversify by taking small shares in various loans.

Several credit unions may invest in one loan for a large amount, with one of the credit unions taking the role of the “lead.” This leading credit union then recruits other financial institutions to participate and share the risks and profits. The lead credit union typically originates the loan, takes responsibility for the loan servicing, organizes and manages the participation, and deals directly with the borrower. Once the partner contracts have been defined, you can use Portico’s participation loan servicing to keep track of the loan details and partner disbursements.

Portico supports the servicing of participation loans with processing options, detailed participation partner information and a comprehensive remittance report