This chapter describes how to fund a loan.
This chapter covers the following topics:
All loans funding activities are carried out on the Funding tab. It contains the Disbursement and Loan Adjustments tabs for Direct Loans, and Loan Additional Receivables tab for ERS Loans.
Loans Funding is designed to be a very flexible process with some restrictions. The features of Loans Funding are listed below:
It provides 100% support for single and multiple disbursements.
It can disburse funds to any registered party and to any number of parties in single or multiple disbursements.
Disbursement schedule can be modified at any time during the loan's life time. You can also add, update, delete, or cancel rows awaiting funding.
Funds can be disbursed on an ad-hoc basis. Disbursement schedule can remain empty or incomplete even for approved and active loans until the time is appropriate.
You can increase or decrease loan amount after the loan is approved.
Tip: The loan amount can be decreased only up to already disbursed amount.
Loan's amortization schedule reflects any changes to the disbursement schedule including disbursement amounts and disbursement dates.
Note: To control how changes to disbursement schedule effect amortization schedule, use "Reamortize On Disbursements" for Direct Loans and "Reamortize On Additional Receivables" for ERS loans on the Origination/Interest Rate tab.
When a direct loan is created its initial disbursement schedule is inherited from the disbursement schedule of the loan product. You are free to modify (or completely delete) the loan's disbursement schedule to match your business scenario.
The Disbursement tab enables you to create the Disbursement schedule for the loan. This is populated with values from the Loan.
Navigate to Disbursements tab under Funding. Select the Add Another Disbursement button to add a new disbursement row.
Additional Information: The button is visible only if there is an undisbursed amount.
Enter the Disbursement Description, Amount and Due Dates fields.
Enter the Payee details under Disbursement details in the Payee tab. The payee is automatically populated with the Loan's Primary Borrower name. You can select other payees or add more than one payee. You can also create new Payee for the disbursement.
Add Conditions to the disbursement using Conditions tabs.
Additional Information: When a new disbursement is created, all of the loan's conditions of type Disbursement Approval are automatically attached to this new disbursement. You can also add more Disbursement Approval Conditions on the Disbursement Conditions tab.
Add Fees to the disbursement using Fees tabs.
Additional Information: When a new disbursement is created, all loan's Funding fees are automatically attached to this new disbursement. You can also add more Funding fees on the Disbursement Fees tab.
Save the changes. The Totals section under disbursement schedule table is updated with the newly saved disbursement amount.
Click the Submit icon on the disbursement row. Upon successful submission, new payment request is created in the AP module.
After the AP payment request is paid, the following changes are automatically done to the loan:
Corresponding disbursement row is updated with status Fully Funded.
Disbursement totals section is updated with funded amount.
Loan's status is updated to Active.
Loan's Funded Amount is updated with the funded amount.
Current amortization schedule is changed based on disbursement amount and date.
There are two ways to cancel already submitted but not paid yet disbursements:
By voiding the payment request in AP.
By clicking the Cancel icon on the disbursement schedule table.
You can cancel or delete the disbursements which are not already submitted. Cancelled disbursements stay in the database and can be viewed by selecting the Display Cancelled Disbursements check box. Deleted disbursements are permanently removed from the database.
The Loan Adjustments tab under Funding enables the Loan Officer to increase or decrease the approved loan amount at any point in time. Adjustments can be made only after the loan has been approved. Perform the following steps to make a loan adjustment:
Navigate to Loan Adjustments tab under Funding.
Select the Add Another Adjustment button under Loan Amount Adjustments to add a new adjustment row.
Enter the adjustment description, amount and effective date and save the changes.
Additional Information: The Add Another Adjustment button is disabled when there is a pending adjustment.
Loan Adjustment request can be approved or rejected only by Loans Manager. To add matching disbursement row upon adjustment approval, select the Automatically Create Matching Disbursement Record check box.
Upon the approval of adjustment request, loan amount is adjusted with the new adjustment amount.
You can reject or delete pending loan amount adjustments. Rejected adjustments stay in the database and can be viewed by selecting the Display Rejected Adjustments check box. Deleted adjustments are permanently removed from the database.
As with Direct loans, ERS loans can be multi funded by adding original AR invoices and debit memos to existing approved ERS loans. Perform the following steps to add an additional receivable to a loan:
Navigate to the Loan Additional Receivables tab under Funding.
Select the Add Another Receivable button. Select receivable LOV pops up. Search and select the receivable that you want to add to the loan.
Enter amount, description and effective date. Save changes.
Additional Information: You can have many pending additional receivables row at the same time.
Additional Information: Effective Date cannot be earlier than last billed installment due date.
Additional Receivable request is approved or rejected only by Loans Manager.
Upon the approval of an additional receivable request:
AR receivable is adjusted.
The loan amount is increased.
Current amortization schedule is updated based on new receivable amount and effective date.
You can reject or delete pending loan amount adjustments. Rejected adjustments stay in the database and can be viewed by selecting the Display Rejected Adjustments check box. Deleted adjustments are permanently removed from the database.