Side by side
The table describes the usual pattern. Each deal is negotiated separately, and the exact effects depend on its terms.
| Warehouse / credit facility | Forward flow | Securitisation | |
|---|---|---|---|
| What it is | A credit line secured on a pool of loans in a separate company | A commitment by an investor to buy new loans as they are made | Loans pooled in a separate company that issues notes to investors |
| Who holds the loans | The lender's own vehicle; the lender keeps the economics | The investor that bought them | The securitisation vehicle, funded by the noteholders; the lender keeps a retained part |
| Balance sheet, in plain words | Loans and the debt against them usually stay with the lender's group | Loans usually leave; the lender gets cash for them | Depends on how much risk the lender keeps; can stay or leave |
| Who funds it | Banks and credit funds, often in senior and junior layers | Funds, asset managers, insurers, sometimes banks | Many investors (public) or a few (private) |
| Size over time | Grows as the lender draws, up to a limit | Grows as loans are sold, up to the agreed amount | Usually a set pool; some deals have a revolving period, and master trusts issue repeatedly |
| Typical stage of the lender | From early growth onwards | Any stage; often for capital-light growth | Once there is a track record and a large enough pool |
| Public detail | Usually size and funders only | Usually size and buyer only | Public deals: prospectus, ratings and reports |
Warehouse and credit facilities
The lender sells its loans to its own special purpose vehicle, which borrows against them. The lender keeps the interest income above the cost of the facility and takes the first losses. Read more in what a warehouse facility is and how it is structured.
Forward flow
The lender sells loans to an investor at an agreed price and usually keeps servicing them for a fee. It earns less from each loan over time, but needs much less capital to keep lending. Read more in what a forward flow agreement is.
Securitisation
A larger pool of loans is funded by notes in several layers, sold to investors. Lenders often use it to refinance a warehouse and free it up for new loans. In the EU and UK, the lender has to keep part of the risk. Read more in securitisation for fintech lenders and STS securitisation.
Which is used when
There is no single right order, and this page does not suggest which a lender should choose. Choices depend on the type of loans, the lender's size and capital, its investors, accounting and regulatory treatment, and market conditions. Many lenders use two or all three at the same time.