diff --git a/crates/loans/src/interest.rs b/crates/loans/src/interest.rs
index 7f196cadd1..c0468383ea 100644
--- a/crates/loans/src/interest.rs
+++ b/crates/loans/src/interest.rs
@@ -129,8 +129,9 @@ impl<T: Config> Pallet<T> {
     }
 
     /// Calculate the borrowing utilization ratio of the specified market
-    ///
-    /// utilizationRatio = totalBorrows / (totalCash + totalBorrows − totalReserves)
+    /// `utilization_ratio = borrows / (cash + borrows - reserve)`
+    /// Since the market can reach a state where `cash == 0 && borrows == reserve`,
+    /// this rate can be infinitely large.
     pub(crate) fn calc_utilization_ratio(
         cash: BalanceOf<T>,
         borrows: BalanceOf<T>,
@@ -145,6 +146,9 @@ impl<T: Config> Pallet<T> {
             .and_then(|r| r.checked_sub(reserves))
             .ok_or(ArithmeticError::Overflow)?;
 
+        if total.is_zero() {
+            return Err(DispatchError::Arithmetic(ArithmeticError::DivisionByZero));
+        }
         Ok(Ratio::from_rational(borrows, total))
     }
 
diff --git a/crates/loans/src/lib.rs b/crates/loans/src/lib.rs
index 8f4373ffa4..e5fc4e8936 100644
--- a/crates/loans/src/lib.rs
+++ b/crates/loans/src/lib.rs
@@ -1195,13 +1195,12 @@ pub mod pallet {
             Ok(().into())
         }
 
-        /// Add reserves by transferring from payer.
-        /// TODO: This extrinsic currently does nothing useful. See the TODO comment
-        /// of the `ensure_enough_cash` function for more details. Based on that
-        /// TODO, decide whether this extrinsic should be kept.
+        /// Add reserves by transferring from payer. This is useful because the reserve balance can be used as
+        /// cash for redeeming. In case the market reaches 100% utilization, the protocol can deposit
+        /// more cash to the reserve, to allow users to exit (redeem) their lend token positions.
+        /// The reserve cash cannot be used for borrowing.
         ///
         /// May only be called from `T::ReserveOrigin`.
-        ///
         /// - `payer`: the payer account.
         /// - `asset_id`: the assets to be added.
         /// - `add_amount`: the amount to be added.
@@ -1454,7 +1453,9 @@ impl<T: Config> Pallet<T> {
         // Ensure there is enough cash in the market
         let exchange_rate = Self::exchange_rate_stored(asset_id)?;
         let redeem_amount = Self::calc_underlying_amount(voucher_amount, exchange_rate)?;
-        Self::ensure_enough_cash(asset_id, redeem_amount)?;
+        if Self::get_total_cash(asset_id) < redeem_amount {
+            return Err(Error::<T>::InsufficientCash.into());
+        }
 
         // TODO: Only free lend tokens are redeemable. Replace logic below with this:
         // if voucher_amount > Self::free_lend_tokens(asset_id, redeemer)?.amount() {
@@ -1511,7 +1512,7 @@ impl<T: Config> Pallet<T> {
     /// Borrower shouldn't borrow more than their total collateral value allows
     fn borrow_allowed(asset_id: AssetIdOf<T>, borrower: &T::AccountId, borrow_amount: BalanceOf<T>) -> DispatchResult {
         Self::ensure_under_borrow_cap(asset_id, borrow_amount)?;
-        Self::ensure_enough_cash(asset_id, borrow_amount)?;
+        Self::ensure_borrow_cash(asset_id, borrow_amount)?;
         let borrow_value = Self::get_asset_value(asset_id, borrow_amount)?;
         Self::ensure_liquidity(borrower, borrow_value)?;
 
@@ -1833,7 +1834,7 @@ impl<T: Config> Pallet<T> {
     /// https://github.com/compound-finance/compound-protocol/blob/a3214f67b73310d547e00fc578e8355911c9d376/contracts/CToken.sol#L518
     /// - but getCashPrior is the entire balance of the contract:
     /// https://github.com/compound-finance/compound-protocol/blob/a3214f67b73310d547e00fc578e8355911c9d376/contracts/CToken.sol#L1125
-    fn ensure_enough_cash(asset_id: AssetIdOf<T>, amount: BalanceOf<T>) -> DispatchResult {
+    fn ensure_borrow_cash(asset_id: AssetIdOf<T>, amount: BalanceOf<T>) -> DispatchResult {
         let reducible_cash = Self::get_total_cash(asset_id)
             .checked_sub(Self::total_reserves(asset_id))
             .ok_or(ArithmeticError::Underflow)?;
diff --git a/crates/loans/src/tests.rs b/crates/loans/src/tests.rs
index 91e3d24320..34be7bddae 100644
--- a/crates/loans/src/tests.rs
+++ b/crates/loans/src/tests.rs
@@ -362,7 +362,7 @@ fn redeem_fails_when_insufficient_liquidity() {
 }
 
 #[test]
-fn redeem_fails_when_would_use_reserved_balanace() {
+fn redeem_succeds_when_would_use_reserved_balanace() {
     new_test_ext().execute_with(|| {
         // Prepare: Bob Deposit 200 DOT
         assert_ok!(Loans::mint(RuntimeOrigin::signed(BOB), DOT, 200));
@@ -375,10 +375,7 @@ fn redeem_fails_when_would_use_reserved_balanace() {
         assert_ok!(Loans::borrow(RuntimeOrigin::signed(ALICE), DOT, 50));
         assert_ok!(Loans::add_reserves(RuntimeOrigin::root(), ALICE, DOT, 50));
 
-        assert_noop!(
-            Loans::redeem(RuntimeOrigin::signed(BOB), DOT, 151),
-            Error::<Test>::InsufficientCash
-        );
+        assert_ok!(Loans::redeem(RuntimeOrigin::signed(BOB), DOT, 151));
     })
 }
 
@@ -956,7 +953,7 @@ fn calc_collateral_amount_works() {
 }
 
 #[test]
-fn ensure_enough_cash_works() {
+fn ensure_borrow_cash_works() {
     new_test_ext().execute_with(|| {
         assert_ok!(Tokens::set_balance(
             RuntimeOrigin::root(),
@@ -965,17 +962,17 @@ fn ensure_enough_cash_works() {
             unit(1000),
             0
         ));
-        assert_ok!(Loans::ensure_enough_cash(KSM, unit(1000)));
+        assert_ok!(Loans::ensure_borrow_cash(KSM, unit(1000)));
         TotalReserves::<Test>::insert(KSM, unit(10));
         assert_noop!(
-            Loans::ensure_enough_cash(KSM, unit(1000)),
+            Loans::ensure_borrow_cash(KSM, unit(1000)),
             Error::<Test>::InsufficientCash,
         );
-        assert_ok!(Loans::ensure_enough_cash(KSM, unit(990)));
+        assert_ok!(Loans::ensure_borrow_cash(KSM, unit(990)));
         // Borrows don't count as cash
         TotalBorrows::<Test>::insert(KSM, unit(20));
         assert_noop!(
-            Loans::ensure_enough_cash(KSM, unit(1000)),
+            Loans::ensure_borrow_cash(KSM, unit(1000)),
             Error::<Test>::InsufficientCash
         );
     })