Capital velocity is how many times the same borrowed capital was deployed in a period: capital goes out through a policy loan, comes back through repayment, and goes out again.
Formula: Capital Velocity = Capital Deployed ÷ Average Loan Balance, over the same period.
A velocity of 2.0× means twice as much capital was deployed as was borrowed on average, so the same loan dollars were used about twice.
Velocity describes activity, not results. Read it alongside spread and repayment: a high number says nothing about whether a deployment earned more than its Loan Interest.
Related terms: Spread, Capital Deployment