Loan Product

Loan products are specific financial products offered to customers, each with defined terms, interest rates, and repayment schedules.

Creating a loan product

1. Navigate to the Accounting Module

2. Under Accounting go to Loan Product

3. Click the '+ New Loan Product' button on the top left to add a new loan product.

4. Provide the necessary details of the loan product as outlined below.

   • Loan Product Details

   • Graduate scale

   • Fees and Penalties (optional)

   • Documents (optional)

Loan Product Details

1. Product Name: Enter the name of the loan product

2. GL Account: Select the General Ledger (GL) account to be used for the loan product.

3. Interest GL Account: Choose the GL account to be used for recording interest income associated with the loan product.

4. Interest Calculation Method:

   • Flat/Straight Line: Interest is calculated on the original principal amount throughout the loan term.

   • Reducing balance: Interest is calculated on the outstanding principal balance, which reduces as payments are made

   • Amortization: Interest is calculated using an amortization schedule where payments include both principal and interest.

5. Payment Frequency: Defines how often payments are to be made. Options include Bi-Weekly, Monthly, Weekly and Daily.

6. Minimum Guarantors: Specify the minimum number of guarantors required for the loan product

7. Minimum Term: Define the minimum duration for which the loan can be taken

8. Maximum Term: Define the maximum duration for which the loan can be taken

9. Grace Period (Days): Specify the grace period in days during which no payments are required after loan disbursement

10. Adjustable Term: Indicate whether the loan term is adjustable

11. Allow Prepayment: Indicate whether prepayment of the loan is allowed

12. Allow Rollover: Indicate whether the loan can be rolled over

Graduate Scale

1. Minimum Amount: Specifies the minimum loan amount that can be offered under this scale.

2. Maximum Amount: Specifies the maximum loan amount that can be offered under this scale.

3. Interest Rate Charge Type: Defines the method by which the interest rate is calculated for loans within this scale

   • Fixed: A constant interest rate applied throughout the loan term

   • Percentage: An interest rate calculated as a percentage of the loan amount

4. Interest Rate Value: The specific value of the interest rate, determined by the chosen charge type.

5. Accrue Frequency: Specifies how often the interest accrues on the loan. Options include Bi-weekly, Monthly, Weekly and Daily

Fees and Penalties (Optional)

Pick any fees or penalties associated with the loan product.

Documents (Optional)

Pick any required documents, from the dropdown, that must be submitted for the loan application.