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

# Creating Borrowing Pools

A Borrower Pool is the smart contract through which Borrowers borrow and repay capital. Any Borrower can create a Borrower Pool specifying the terms:

●  Interest Rate: Fixed interest rate APR, e.g. 12%.

●  Limit: Total capital that can be borrowed, e.g. $5M.

●  Payment Period: Frequency of interest payments, e.g. every 30 or 60 days.

●  Term: When the full principal is due, e.g. 365 days.

●  Late Fee: Additional interest owed when payments are late, e.g. 5%.

Creating a Borrower Pool is like proposing a “term sheet” to liquidity providers. The amount Borrowers can borrow is based on how much liquidity providers are able to commit.

Notably, Borrowers need to set a limit for their Borrower Pools, a self-imposed cap on how much capital they can borrow. While Borrowers might ideally want an infinite limit, LPs want to know that they are staking only towards a total potential amount that the Borrowers can safely deploy. Borrowers therefore have an incentive to set the limit only as high as they can convince LPs they can safely use.

After borrowing, Borrowers make repayments to the Borrower Pool according to its interest rate and payment period. When they pay more than the interest owed, the remainder is applied to the principal balance.


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