> ## Documentation Index
> Fetch the complete documentation index at: https://docs.synclear.io/llms.txt
> Use this file to discover all available pages before exploring further.

# Borrowing on Synclear: On-Chain Credit for Businesses

> Understand how Synclear's Borrow module works — overcollateralized credit lines, LTV ratios, interest models, and liquidation mechanics.

Synclear's Borrow module gives on-chain businesses access to structured credit facilities secured by on-chain collateral. Rather than liquidating treasury assets to fund operations, businesses can post collateral and draw against a credit line — preserving exposure to underlying assets while unlocking working capital. All credit positions are fully on-chain: collateral is held in non-custodial escrow contracts, loan balances accrue in real time, and liquidation logic is enforced by protocol smart contracts without manual intervention.

## Core Concepts

**Overcollateralized credit lines** are the foundation of Synclear's lending model. Every credit line is backed by collateral with a market value exceeding the outstanding loan balance. The ratio of loan principal to collateral value — the loan-to-value (LTV) ratio — determines how much a borrower can draw and defines the safety buffer before liquidation is triggered.

**Interest rate models** on Synclear use a utilization-based formula. As aggregate borrowing against a collateral pool rises, the cost of capital increases to balance supply and demand. Rates are expressed as an annualized percentage but accrue continuously per block, so outstanding balances compound in real time.

**Liquidation mechanics** protect lenders and the protocol by automatically reducing undercollateralized positions. When a position's health factor falls below 1.0 — meaning collateral value has declined relative to outstanding debt — liquidators can repay a portion of the debt and claim the associated collateral at a discount. Understanding liquidation thresholds is critical before drawing against any credit line.

<Note>
  **Eligibility:** Borrowing on Synclear is available to verified on-chain businesses that have completed the onboarding and identity verification process. Individual retail accounts are not eligible for credit line products. Contact the Synclear team or complete the business onboarding flow to apply.
</Note>

## Module Reference

<CardGroup cols={2}>
  <Card title="Credit Lines" icon="arrows-rotate" href="/businesses/borrow/credit-lines">
    How revolving and term credit facilities work — drawdowns, repayments, interest accrual, and utilization tracking.
  </Card>

  <Card title="Collateral & LTV" icon="shield-halved" href="/businesses/borrow/collateral-and-ltv">
    Accepted collateral assets, LTV ratios by asset class, health factor calculation, and liquidation mechanics.
  </Card>
</CardGroup>

## How Borrowing Fits Into the Synclear Stack

The Borrow module is designed to interoperate with the rest of the Synclear financial stack. Businesses that hold treasury assets in Synclear's Earn module can optionally use those positions as collateral without withdrawing, maintaining yield exposure while accessing credit. Borrowed funds can be routed directly to operating wallets, payroll contracts, or other protocol integrations without leaving the on-chain environment.