15Managing Commercial Loans
Managing Commercial Loans
This chapter describes the management of commercial loans. It includes the following topics:
About Managing Commercial Loans
This chapter presents the procedures necessary to create, maintain, and process a commercial loan request in Siebel Finance. The commercial loan request process involves navigating through a series of screens used to capture client and facility information. Loan officers, credit committee team officers, and administrators are the primary users.
Use these procedures to perform the administrator tasks of defining assessment templates, activities plans, documents templates, commercial loan approval stages, the contacts required to approve a commercial loan, portfolio types for a commercial loan, and underwriting standards.
End users are commercial loan and credit committee officers. Commercial loan officers will use the procedures in this chapter to:
Create new commercial loan requests
Create additional borrowers for a loan
Create a facility
Associate facilities with borrowers
Create bank syndication for a facility
Set the pricing and fees for a facility
Capture the guarantors for a facility
Create covenants for a facility
Copy covenants to a facility
Set up collateral for a facility
Create and review policy exceptions for borrowers and facilities
Review group lending exposure
Review underwriting standards
Submit a loan request to a credit committee
Credit committee officers will use the procedures in this chapter to:
Check and review the data in a loan request
Make decisions on a loan request
Assign a loan request to the next person on the credit committee
Scenarios for Managing Loan Requests
These scenarios feature sample tasks performed by a financial institution’s applications administrator and commercial bankers. Your company might follow different workflows according to its business requirements.
In these scenarios, the applications administrator is responsible for setting up approval stages and underwriting standards. He requires administrative responsibilities to:
Set up an assessment template and activities plan
Create a document template
Set up an approval level
Define portfolio types and underwriting standards
End users are loan officers and credit administrators. They enter information to:
Create a loan request
Create a facility for borrowers
Attach a company and financial needs analysis to the loan request
Choose a loan approval level
Assign the loan request to a credit committee
Administrator Sets Up Approval Stages and Underwriting Standards
An administrator receives a request to set up two new loan approval stages and add a new underwriting standard for a chemical portfolio. The request specifies that a loan smaller than one million dollars requires two approval stages, whereas a loan larger than one million dollars requires three approval stages. The administrator sets up the following two approval levels:
Level A for a loan less than one million
Level B for loans greater than one million
He also sets up the individuals who are responsible for approving each stage of the loan. Finally, the administrator sets up the new underwriting standard.
Loan Officer Creates New Loan Request
A loan officer receives a call from a chemical company that wants to borrow 1.25 million dollars for working capital. She creates a new loan request and then sets up a working capital facility. The officer determines the price and fees, collateral, covenants, and policy exceptions for this facility. She then attaches the company analysis and financial statement to the loan request.
When the loan officer chooses the chemical portfolio, the underwriting standard that is set by the administrator automatically appears. The loan officer chooses approval level B for the loan and selects the credit committee name for each stage.
Credit Committee Officer Reviews Loan Request
A credit committee officer reviewing her loan requests sees that there is a loan request in the queue waiting for her approval. She reviews the loan request details and the attachments that contain company and financial analysis. She decides to approve the credit. After adding her decision and comments to the loan request, the credit committee officer sends the request to the next credit committee officer for the officer’s approval.
Credit Administrator Sets Up Capital Facility
A credit administrator looks at his queue and sees that one request has been approved. The administrator prints the credit summary with the decision and adds it to the company’s credit file. The administrator then sets up the working capital facility that has been approved.
Process of Managing Commercial Loans
This topic details sample tasks often performed by administrators and end-users when managing commercial loans. Your company might follow a different process according to its business requirements.
Administrator Procedures
The following list shows tasks administrators typically perform to manage commercial loans:
End-User Procedures
The following list shows tasks end users typically perform when managing commercial loans:
Activating Loan Request Workflows
| Workflow Process | Comments |
|---|---|
| FINS Commercial Loan - Populate Company Group Name |
This workflow makes sure that the Parent Account value is kept up to date as the Account value is modified. |
| FINS Commercial Loan - Refresh Company Group Name | This workflow is called to refresh the user interface as the Parent Account value is changed. |
Reloading Runtime Events
When you activate the commercial loan request workflows, your runtime events automatically reload. However, you can manually reload them if necessary.
To reload runtime events
Navigate to the Administration - Runtime Events screen, and then the Events view.
From the menu, select Reload Runtime Events.
Assessment Templates for Loan Approvals
The assessment template must be set up so that end users can assess loan requests to determine whether they must go through the approval process. Some loan requests, with adequate assessment scores, might not be required to go through the approval stages. After an administrator sets up the assessment templates, end users can select the appropriate one and enter the answer for each attribute. Based on the answers, the final score is calculated.
For more information on setting up an assessment template, see Siebel Applications Administration Guide.
Activities Plan for Loan Requests
You must set up the activities plan so that end users can accomplish and coordinate complex tasks. The activities plan creates a set of activities for the loan request. The end user can select a particular activities plan template, and let the Siebel application execute or prompt the user for those activities. For more information about creating an activity plan, see Siebel Applications Administration Guide.
Document Template for Loan Requests
You must set up the document template so that end users can print a prefilled document. After the administrator sets up the document templates, end users can select the appropriate template, which is automatically populated with information from the Siebel Finance database.
For more information on creating document form templates, see the topic on creating proposal templates in Siebel Applications Administration Guide.
Setting Up Approval Levels
Siebel Finance supports an automated commercial loan approval process. The administrator is responsible for setting up a financial institution’s approval levels and the corresponding approval stages. For example, an administrator might set two approval levels: one for commercial loans under one million dollars, the other for commercial loans over one million dollars. The approval level assigned to a loan request depends on the details of the loan.
To set up the approval level for a commercial loan
Navigate to the Administration - Finance screen, and then the Commercial Loan view.
Click the Approval Administration view tab.
To create a new approval level, add a record in the Approval Level list, and complete the necessary fields as described in the following table.
Field Comments Approval Level
Name for the approval level.
Description
Describes which loans to use with the approval level.
To add an approval stage, add a record in the Approval Administration list, and complete the necessary fields as described in the following table.
Field Comments Executive
Indicates the contacts to add to the approval stage.
Stage #
Shows the stage number.
Note: Modify an existing approval level by selecting a record in the Approval Level list, and updating the associated records in the Approval Administration list.
Setting Up Portfolio Types for Commercial Loans
Using the Portfolio Administration view, administrators can set up the commercial loan portfolios that are used to group similar types of commercial loans. For example, an administrator might set up Automobile, Manufacturing, and Chemical portfolio types.
In this view the administrator can also set the limit and utilization of each portfolio type. For example, an administrator might set the limit for an automobile portfolio at 100 million dollars. As a result, the organization’s combined loan total for the automobile industry must not exceed 100 million. The utilization captures how much the bank already lends to the automobile industry.
After the appropriate portfolios are set up, end users can then review the portfolios in the Request Summary view to see the financial institution’s exposure in each industry.
To set up a commercial loan portfolio
Navigate to the Administration - Finance screen, and then the Commercial Loan view.
Click the Portfolio Administration view tab.
To create a new portfolio type, add a record in the Loan Portfolio Type list, and complete the necessary fields as described in the following table.
Note: Modify an existing portfolio by selecting a record in the Portfolio Administration list, and updating the record as needed.Field Comments Limit
Financial organization’s limit for combined commercial loans in this portfolio.
Portfolio Type
Name for the portfolio.
Utilization
Captures the current exposure of the financial organization within the portfolio.
After setting up the appropriate portfolios for commercial lending, administrators can add underwriting standards to the portfolios. These standards are used by the credit committee when determining whether to finance the loan. An example of a portfolio underwriting standard is a leverage of less than 30% for a software portfolio.
The values in this view are displayed in the Portfolio Administration view tab.
Setting Up a Commercial Loan Underwriting Standard
Use the following procedure to set up a commercial loan underwriting standard.
To set up a commercial loan underwriting standard
Navigate to the Administration - Finance screen, and then the Commercial Loan view.
Click the Portfolio Administration view tab.
In the Loan Portfolio Type list, select a portfolio for which you want to set up an underwriting standard.
In the Portfolio Administration list, add a record and complete the necessary fields as described in the following table.
Field Description Definition
Definition of the standard; for example, loan to value or collateral value.
Standard
Standard set by the bank.
Type
Type of underwriting standard used for the loan request; for example, Coverage, Leverage, or Team.
Associating Facilities with Financial Accounts
After a facility is approved, administrators can use Siebel Finance to create a facility in the Financial Account screen. After the financial account for the approved facility is created, the administrator must also associate the new financial account with the approved facility. This makes certain that the next time a user chooses the approved facility, the loan information is automatically populated from the financial account screen. The administrator can also set the status of the facility in this view. If the facility is closed, the administrator must change the status to Closed so that the facility is not available for end users to select.
To associate a facility with a financial account
Navigate to the Administration - Finance screen, and then the Commercial Loan view.
Click the Facility Financial Account Administration view tab.
In the Financial Account/Facility Association list, select the status for the facility in the Status field.
Note: If the financial account does not exist, add it. For more information about adding a financial account, see Managing Financial Accounts.In the Account Number field, select the financial account number to associate with the facility.
Creating Commercial Loan Requests (End User)
End users can create a loan request using one of the following views:
Companies screen, Loan Request view
Commercial Loan screen, Requests view
TheSiebel Finance Commercial Loan screen provides access to commercial loan requests. The Requests list displays information about the request, such as company name, request stage, and lending information. End users can use the Commercial Loan screen to locate and update the requests that they create.
To create a commercial loan request
Navigate to the Commercial Loan screen.
In the Request list or form, add a record and complete the necessary fields as described in the following table.
Field Description Name
Descriptive name to identify the request.
Request Method
Indicates the loan request type, such as Business Loan Application or Credit Card Application.
Request Stage
The values displayed in the Request Stage field drop-down list depend on the request type chosen in the Request Method field.
Team
Organization’s contacts that have access to the commercial loan request.
After creating a loan request, end users can begin adding the details that are used to make loan decisions. The Borrower Detail view is used to show the profile details of each borrower, such as business, location, and year established. The Borrower Detail information is automatically populated using the information in a company’s profile. As a result, end users must first navigate to the Companies view and update the borrower’s profile.
For more information about updating a company profile, see Managing Companies.
Adding Borrower Details to a Loan Request
Use the following procedure to add borrower details to a loan request.
To add borrower details to a loan request
Navigate to the Commercial Loan screen.
In the Requests list, drill down on a commercial loan request.
The Borrower Detail view appears.
In the Request Borrower list, select a borrower to which to add details.
Scroll down to the Public Rating list, add a record, and complete the necessary fields as described in the following table.
Field Description Source
Source of the ratings information such as Moodys.
Rating
The rating level, such as AAA.
Debt Type
Indicates whether long term or short term debt.
The Request Summary view is used to capture key credit decisions and approval stages for loan requests. This view is also used to capture decisions from credit committees.
Associating an Approval Level with a Loan Request
Use the following procedure to associate an approval level with a loan request.
To associate an approval level with a loan request
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
In the Request form, select the approval level to associate with the loan request in the Approval Level field.
Note: For information on setting up an approval level, see Setting Up Approval Levels.Click the Request Summary view tab.
The Decision list at the end of the screen is populated with the stages associated with the approval level, as set up by the administrator.
In the Decision list, select officers for each stage, if necessary.
To start the loan approval process, select the record for the first approval stage in the Decision list, and click Assign.
The Team field in the Request form displays the selected officer’s name. This makes the record visible to that officer.
Note: For more information about assigning a loan, see Assigning Loan Requests (End User).
The Request Summary view is also used to manage credit issues associated with a loan request.
Creating or Modifying a Credit Issue for a Commercial Loan Request
Use the following procedure to create or modify a credit issue for a commercial loan request.
To create or modify a credit issue for a commercial loan request
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Request Summary view tab.
In the Key Credit Issues list, add a record and complete the necessary fields.
Setting Up Facilities (End User)
The Facility Set Up view allows end users to associate the borrowers of a commercial loan request with a corresponding facility.
To share one facility between two companies
Highlight the first company and create a new facility.
Highlight the second company and associate the same facility with this second company.
When end users create new records in the loan facility list, an Association dialog box displays all facilities under the company group name. The user can select an existing facility for a facility that is renewed or create a new one for a new facility.
Creating a New Facility and Associate a Borrower
Use the following procedure to create a new facility and associate a borrower.
To create a new facility and associate a borrower
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Facility Set Up view tab.
In the Borrower list, select a borrower.
To create a new facility for the borrower, scroll down to the Loan Facility list, add a record, and complete the necessary fields.
Note: When an existing facility is selected, some fields in the Facility Set Up views are automatically populated using information in the Financial Account screen. Additionally, when you select an existing facility, all other information related to this facility, such as prices, fees, and covenants, is copied over to the new request.
Syndicating Facilities (End User)
In some instances, the facility requested by a customer might exceed the maximum amount that an organization can handle. In these cases, end users can syndicate the loan to spread the loan facility among other organizations.
To syndicate a facility
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Facility Syndication view tab.
In the Borrower list, select a borrower.
In the Loan Facility list, select a facility for the borrower.
In the Bank Syndication list, add a record and complete the necessary fields.
Setting Pricing and Fees for Facilities (End User)
End users can use the Pricing and Fees view to set up the pricing and fees for facilities. For example, an organization might charge a setup fee for each facility created. The end user can use the Fees list to add a fee.
The prices and fees that appear in the Pricing and Fees view are populated automatically, with data from the products that the administrator has set up. For more information on creating new products, see Managing Products and Pricing or see Siebel Product Administration Guide.
To set the pricing and fees for a facility
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Pricing and Fees view tab.
In the Borrower list, select a borrower.
In the Loan Facility list, select a facility for the borrower.
The Rates list and the Fees list are automatically updated.
To add a new rate, add a record in the Rates list, and complete the necessary fields.
To add a record in the Fees list, and complete the necessary fields.
Adding Guarantors to Loan Facilities (End User)
Some borrowers might use a guarantor to secure a commercial loan. Using the Guarantors view, end users can add guarantors to a loan facility.
To add a guarantor to a loan facility
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Guarantors view tab.
In the Borrower list, select a borrower.
In the Loan Facility list, select a facility for the borrower.
In the Guarantors list, add a record and complete the necessary fields.
Adding Covenants to Facilities (End User)
Using the Covenants view, end users can associate facilities with covenants. For example, an organization might require a borrower to submit a financial statement every quarter. This type of requirement can be created and managed in the Covenants view.
To add a covenant to a facility
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Covenants view tab.
In the Borrower list, select a borrower.
In the Loan Facility list, select a facility for the borrower.
In the Covenants list or Covenant Detail form, add a record and complete the necessary fields as described in the following table.
Field Description Covenants Type
Select Coverage or Leverage.
Current
The current value of the covenant.
Proposed
The proposed value for the client to comply with the covenant.
Definition
Brief description of the covenant.
Measurement
Measurement used to define the covenant, such as month or year.
Operand
Operand used to define the covenant conditions. For example, <, >, =.
Copying Existing Covenants from One Facility to Another
If necessary you can copy existing covenants from one facility to another.
To copy existing covenants from one facility to another
Select the facility that has the covenants to be copied.
In the Covenants list, click Apply To Facility.
In the Pick Loan Facility dialog box, select the facility to which the covenants are to be added, and click OK.
Adding Collateral to Loan Facilities (End User)
Some borrowers might use collateral to secure a commercial loan. Using the Collateral view, end users can add collateral to a loan facility.
To add collateral to a loan facility
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Collateral view tab.
In the Borrower list, select a borrower.
In the Loan Facility list, select a facility for the borrower.
In the Collateral list, add a record and complete the necessary fields.
Creating Policy Exceptions (End User)
After setting up the loan details and adding all the necessary information to make a decision, end users can review loans and determine whether the loan request conforms to all of the organization’s standard policies. If the loan request does not conform, create a policy exception to explain the differences.
You can create policy exceptions at one of the following three levels:
Loan request level
Borrower level
Facility level
To create a policy exception at the loan request level
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Request Detail view tab.
Scroll down to the Request Policy Exceptions list and add a record.
In the Type field, select a type of exception to add.
In the Comments field, type a detailed explanation for the policy exception.
Creating a Policy Exception at the Borrower Level
You can also create a policy exception at the borrower level.
To create a policy exception at the borrower level
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Policy Exception view tab.
In the Borrower list, select a borrower.
In the Borrower Policy Exception list, add a record and complete the necessary fields.
In the Comments field, type a detailed explanation for the policy exception.
Creating a Policy Exception at the Facility Level
You can also create a policy exception at the facility level.
To create a policy exception at the facility level
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Policy Exception view tab.
In the Borrower list, select a borrower.
In the Loan Facility list, select a facility for the borrower.
In the Loan Facility Policy Exception list, add a record and complete the necessary fields.
In the Comments field, type a detailed explanation for the policy exception.
Reviewing Underwriting Standards for Loan Requests (End User)
Before submitting a loan request, loan officers must determine whether the request conforms to the organization’s underwriting standard.
To review an underwriting standard
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
In the Request form, select a portfolio to which the borrowers belong in the Portfolio field.
Click the Request Detail view tab.
The Underwriting Standard list is populated with the standard for the selected portfolio.
Update the fields as needed.
Reviewing Group Exposure (End User)
End users can use the Exposure Summary view to display the combined loan total given to an organization and all its subsidiaries.
To review the group exposure
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Exposure Summary view tab.
The Group Exposure list is populated with information from the Financial Account screen. If this list does not display any records, make sure that a financial account is associated with the company group name.
Entering Credit Decisions for Commercial Loans (End User)
After reviewing a loan, credit committee officers can use the Request Summary view to enter their decisions about the loan.
To enter a credit decision for a commercial loan
Navigate to the Commercial Loan screen.
In the Request list, drill down on a commercial loan request.
Click the Request Summary view tab.
Scroll down to the Decision list and select a record for the decision.
In the Decision field, select Approved, Counter Offer, or Decline.
In the Comments field, type a detailed description of the decision.
Assigning Loan Requests (End User)
After a credit committee officer enters a decision about a loan request, the end user can assign the request to the next credit committee officer.
To assign a loan request to the next credit committee officer
Navigate to the Commercial Loan screen.
From the Show drop-down list, select My Requests.
In the Request list, drill down on a commercial loan request.
Click the Request Summary view tab.
In the Decision list, select the next credit committee officer, and click Assign.