Create a Child Loan Contract
Overview
A child loan can be a simple loan or a flexible amortization-based loan. It can be disbursed only once. A parent master facility loan is disbursed through a child loan, and there can be many child loans for a master facility parent loan. The Sum of the loan amounts of all the child loans of a parent master facility loan must be less than or equal to the loan amount in their parent master facility loan.
For more information on a simple loan or a flexible amortization-based loan, see the CL Loan User Guide for Simple Loans and CL Loan User Guide for Amortized Loans.
Key Concepts
Interest or charge on the child loan can be waived.
You can also reverse the interest or charge waived. If the interest and charge were waived on the same day, then the reversal can only work in the reverse order in which the interest and charge were waived. For example, if the interest was waived first and then the charge, then you must reverse the charge waived first and then the interest.
You cannot make a backdated payment on a child loan if the backdated transaction date is less than the parent Master Facility LAD date.
Disbursal of a child loan changes the LAD of the parent master facility.
A payment on a child loan does not change the parent master facility LAD unless the parent master facility is a revolving loan.
Create a Child Loan
Prerequisites
Before creating a child loan, ensure that the following prerequisites are met:
The user is assigned to the company.
A lending product is created of the type Loan, Amortization Based Loan, or Flexible Amz Loan.
The lending product is assigned to the company.
Fees and fee set are defined.
Steps
To create a child loan:
Log in to your Salesforce account.
Click (App Launcher).
Search for
CL Loan
, and then click it.Click CL Contracts.
Click New.
Note:If you do not see the New button, then perform the steps provided in the Add the New Button in CL Contract Page for Lightning View of the CL Loan Administration Guide.
In the New CL Contract window, select any one of the following record types, and then click Next:
Loan
Amortization Based Loan
Flexible Amz Loan
Note:- The Line of Credit record type is not supported for child loans
- Do not select Master Facility record type as this is a child loan.
Specify the details as explained in the following link: Field Reference for Creating a Contract.
Note:The Loan Amount must be such that the sum of the loan amounts of all the child loans cannot be greater than the loan amount specified in Master Facility. If you try to disburse a child loan with an amount greater than required, the system displays the following error message: "Master Loan does not have enough funds to make disbursal transaction."If you try to disburse a child loan with a zero amount, the system displays the following error message: "Unable to make disbursal transaction with Amount 0."
In the Master Facility field, click (Master Facility Lookup (New Window)) to select the required Master Facility.
The Funding In Tranches is disabled as a child loan cannot be disbursed more than once. Hence, the product type of the child loan must not have the FIT flag as enabled.
If there is any prepaid fee attached to the product, then you must click Populate Fees in the Pre Paid Fee section to populate prepaid fees. Otherwise, the system displays the following error message while disbursing the loan: "PrePaid fees is defined on the product but not populated on contract, please use 'Populate Fees' to populate the prepaid fees first."This displays the pre-paid fee with the amount in the Pre Paid section.
This changes the status of the loan to Partial Application.
Approve a Child Loan
For more information on approving a contract, see Approve a Contract.
This changes the status of the loan to Approved.
Disburse a Child Loan
Steps
To disburse a child loan:
In the preceding child loan, click Transactions.
In the Funding tab, click New Loan Disbursal Transaction.
Specify the following details:
Field Name
Action
Transaction Amount Specify the loan amount.
Note:The system displays an error message if the value is not equal to the loan amount.
Mode of Payment Click Regenerate Distributions.
Click Save.
This completes the creation of a child loan.
This updates the LAD of the parent master facility loan.
Note:You cannot disburse a child loan more than once.
This changes the status of the loan to Active-Good standing.
For more information on funding a loan, see Disburse a Loan.
Close a Child Loan
If you have enabled the Manual Loan Closure flag of the child loan, then you can close a child loan manually. Otherwise, the child loan is closed when a payoff is made,
Reverse a Child Loan Closure
You cannot reverse a child loan closure if its parent master facility loan is closed.