> For the complete documentation index, see [llms.txt](https://svim.gitbook.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://svim.gitbook.io/getting-started/protocol-participants/borrowers.md).

# Borrowers

**Definition**: The borrower is an individual or entity that seeks to obtain a loan from the liquidity pool by collateralizing their real-world assets. Borrowers are receivers of loan fund disbursements and are obligated to payback the loan according to the contract.

**Explanation**: Borrowers in a real-world assets tokenization liquidity pool typically include asset owners, businesses, or other entities that need access to capital. They provide tokenized real-world assets (such as real estate, invoices, or commodities) as collateral to secure loans issued in stablecoins or other cryptocurrencies from the liquidity pool.

**Who They Are:**

* **Asset Owners:** Individuals or businesses that own physical assets like real estate, commodities, or intellectual property and seek liquidity by using these assets as collateral.
* **Businesses**: Small and medium-sized enterprises (SMEs), startups, or established companies looking for capital to fund operations, growth, or other business activities.
* **Entities with Tokenizable Assets**: Any entity that possesses assets suitable for tokenization and is willing to use those assets to secure a loan.

**What They Do:**

* **Collateralize Assets**: Borrowers tokenize their real-world assets and use these tokens as collateral to secure loans from the liquidity pool.
* **Obtain Loans**: They receive the loan amount in stablecoins or other cryptocurrencies, which they can then convert to fiat currency or use directly for their needs.
* **Repay Loans:** Borrowers are required to repay the loan amount along with any agreed-upon interest and fees according to the loan agreement terms.

**Responsibilities:**

* **Maintaining Collateral Value**: Ensure that the tokenized assets used as collateral maintain their value and meet the requirements set by the liquidity pool.
* **Repaying the Loan**: Adhere to the repayment schedule outlined in the loan agreement, including principal, interest, and any associated fees.
* **Providing Accurate Information:** Supply truthful and accurate information about the assets being collateralized, including their value, condition, and legal status.
* **Compliance**: Follow all applicable laws, regulations, and protocol rules related to the loan and collateralization process.

**Consequences of Default:**

* **Collateral Seizure**: If a borrower defaults on the loan, the tokenized assets used as collateral can be seized by the liquidity pool to cover the outstanding loan amount.
* **Liquidation of Collateral**: The seized collateral may be liquidated (sold) to recover the loan amount. This can involve selling the tokenized assets on secondary markets or other platforms.
* **Loss of Ownership**: Defaulting borrowers lose ownership of the collateralized assets once they are seized and liquidated.
* **Credit Impact:** Defaulting may impact the borrower’s creditworthiness and ability to obtain future loans, both within the tokenization protocol and in traditional financial systems.
* **Legal and Financial Penalties**: Depending on the jurisdiction and specific terms of the loan agreement, borrowers may face additional legal and financial penalties for defaulting on their loan obligations.