# Borrowing Limits

Storage Provider's borrowing limits

Before jumping into the limits of the Pool, it's important to understand three metrics: **loan-to-value (LTV),** **debt-to-equity (DTE)** and **debt-to-income (DTI). **The DTE and DTI ratios are used to limit the amount SPs can borrow from the Pool.

## Loan-to-value ratio

The loan-to-value ratio - measures the amount of borrowed funds against the SP's liquidation value.

For example:

## Debt-to-equity ratio

The debt-to-equity ratio - otherwise known as the "skin in the game" ratio - measures the amount of borrowed funds against the SP's equity value.

For example:

## Debt-to-income ratio

The debt-to-income ratio measures the expected weekly payment against the expected weekly earnings of the SP.

For example:

## Borrow limits

The Pool enforces two borrowing limits:

**LTV < 80%**- the SP can only borrow an amount less than or equal to 80% of their liquidation value.**DTE < 200%**- the SP can only borrow an amount less than or equal to 2x the amount of equity they bring to the protocol. As the SP earns more equity through block rewards, it can continuously borrow more.**DTI < 25%**- the SP can only borrow an amount such that the weekly expected payment can be covered by 25% of the SP's weekly expected earnings.

Some examples of accepted/rejected borrow requests:

The GLIF Website will be updated with an SP calculator, which will show each SP how much they can borrow.

## The Borrow Cycle

The Pool is meant to grow with the SP. As the SP borrows funds and pledges them to the Filecoin network, their expected earnings increase, allowing them to borrow more. As the SP earns block rewards, its equity value increases, increasing the SP's borrow cap.

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