MSL Loan Reserve

The Medical Savings and Loan offers interest free loans for emergencies and preventative care.

The difficulty in medical lending is finding a source for the loans. The obvious source for loans is the savings accounts. Since there is a high default rate in medical lending, making loans directly from the savings account won't work.

To create a source of the loans, the MS&L requires policyholders to buy a share in a loan reserve.

To assure that there's money on hand in case of a calamity, one would want the the loan reserve to be over-funded. So, if one anticipates $1000 per client in lending, one would create a loan reserve of perhaps $3000.

At the end of each financial year, the excess from the loan reserves would fall back into the savings account. At which time, of course, policy holders would be asked to buy a new loan reserve share. The loan reserve structure places a buffer between the savings accounts and the lending base.