As is normal, people who take out a loan pay interest on the money that they have borrowed. At RateSetter, part of the interest goes to you, the investor, while another part goes directly into the Provision Fund.
The Provision Fund grows along with the portfolio size and repayments made by borrowers. The money that is in the Provision Fund is a buffer to protect your investment. It does this by automatically reimbursing you if a borrower’s payment is missed.