What Does Pro Rata Disbursement Mean and Why Would I Choose Pro Rata for a Loan Disbursement?

Pro rata disbursement means that when a payment is collected on a loan with multiple lenders, the funds are distributed to each lender in proportion to their ownership share of the loan (rather than in a fixed dollar amount or a different custom split).

Why Lenders Choose Pro Rata
On loans with co-lenders, each lender's ownership percentage is recorded on the contract.

Pro rata disbursement ensures every dollar collected is automatically divided according to those exact percentages.

For example, a lender who funded 30% of the loan consistently receives 30% of every payment collected without needing manual calculation or intervention each time a payment comes in.