One Time Funding of a Loan
Overview
Once a loan is approved, the lender can fund the loan. Funding involves disbursing the approved loan amount to the borrower. For regular loans, the funds are released to the borrower at one single instance. For example, the approved loan amount is 10,000 and it is fully disbursed in one installment.
If the loan is funded in tranches, the loan amount is disbursed in parts. For steps to fund a loan in tranches, refer to Funding a Loan in Tranches.
Funding happens through a loan disbursal transaction. While creating the disbursal transaction, you must ensure that:
Disbursal Distribution
You may disburse the total financed amount to a single borrower account. Or, if the loan is a debt consolidation loan, you can distribute the amount across the different borrower bank accounts linked to the individual loan contracts.
Prepaid Fee
Multi Mode Disbursement
Disburse a Loan
Prerequisites
To disburse a loan amount, the following is a prerequisite:
- The CL contract is approved.
Steps
To fund a CL contract, perform the following steps:
Log in to your Salesforce account.
Click CL Contracts.
Select the required CL Contract ID.
Click Transactions.
In the Funding section, click New Loan Disbursal Transaction.
Note:Transaction amount defaults to the loan amount.
Specify the details as described in the following table:
Field Name Purpose and Action Loan Amount The total loan amount disbursed to the borrower. If any prepaid is set up on the loan contract, the borrower or lender may choose to add it to the loan amount. In such case, the interest accrues on the sum of the financed amount and the prepaid fee, while disbursed amount to borrower remains as the financed amount.
If prepaid fee is not added to loan amount, the disbursed amount is less prepaid fee amount.
Mode of Payment Search for or specify the Mode of Payment. This is the mode through which the fund is disbursed to the borrower.
For example, Cash, Check or ACH. You can set up payment modes as per your business requirements.
Note:You can also click the look-up icon to look for the required mode of payment.
Cleared The checkbox is auto selected once the disbursal transaction gets cleared. That is, the amount is disbursed to the borrower. Rejected The checkbox is auto selected if the transaction is rejected by the system or the bank during the clearing process. Reversed The checkbox is auto selected if you reverse the disbursal transaction. Transaction Amount Specify the transaction amount. For a full or one time disbursal, this is the same as the loan amount. Transaction Date Specify the date on which the disbursal transaction is created. In the Transaction Distribution section, specify the details described in the following table, and the click Save.
Field Name Purpose and Action Distribution Amount To define how the disbursal amount is distributed under different payment heads, specify the distribution amount. This includes the amount paid to each borrower account, if this is a debt consolidation loan, and any amount paid towards prepaid fee. The sum of all distributions must sum up to the transaction amount.If the entire amount is to be routed to a single borrower account, this must be the same as the disbursal amount.
Note:Ensure that the sum of the distribution amounts is the same as the transaction amount. Otherwise, you receive the following error message: The sum of the distribution amounts must be equal to the disbursal transaction amount.
Bank Account Provide the bank account to which the distribution amount is to be disbursed.
For example, if the same loan has multiple borrowers, then you can give different bank accounts for each borrower.
Payment Mode To disburse the distribution amount in multiple modes, specify the payment mode for each distribution amount. For example, Cash, Check, or ACH.
Note:If the payment mode is not specified then it considers the same mode as specified in the Mode of Payment of the main loan disbursal transaction.
Reference Number Specify a reference number.
For example, the loan contract ID in case this distribution is routed to another loan held by the borrower.
You can click + to add multiple distributions of the disbursal amount. If any prepaid fee is set up on the contract, a distribution is created for the fee amount, and balance amount is available for disbursal to the borrower.
Validating the Funding Transaction
- After successful disbursal, navigate to the Transactions, and then, Funding tab. The status of the disbursal transaction is marked as Cleared.
- The loan contract status changes from Approved to Active - Good Standing.