Pro-rata Waterfall
Pro-Rata Structure
In a Pro-Rata structure, both tranches share repayments more evenly. Senior still has priority on interest, but principal is allocated proportionally based on each tranche’s outstanding amount.
How It Works
When the pool receives a repayment:
Interest Distribution
Senior overdue interest
Senior current interest
Junior overdue interest
Junior current interest
Remaining interest flows to EIS
Principal Distribution
As long as the Senior tranche has outstanding principal, principal is shared pro-rata between Senior and Junior based on their remaining balances.
Once Senior is fully repaid, all principal flows to Junior.
In Simple Terms
Interest still prioritises Senior first.
Principal is shared proportionally until the Senior tranche is paid off.
Junior receives principal earlier compared to Sequential, reducing their risk relative to that structure.
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