Create a commercial line of credit
A Line of Credit is a credit arrangement in which a financial institution agrees to lend money to a customer up to a specified limit. Generally, line of credit is arranged before the funds are actually required, thus providing flexibility to the customer. It ensures the ability to meet short-term cash needs when the need arises.
Prerequisites
The following are the prerequisites to creating a line of credit:
The Line of Credit CL Product is set up
A contact or an account is set up
Steps
Perform the following steps to create a line of credit application:
Log in to your Salesforce account.
Go to Applications.
Select New.
Select Line of Credit as the Record Type of New Record and select Continue.
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In the New Application page, go to the Select Product section and specify the required CL Product to identify the line of credit product.
The Asset Class Name is displayed, identifying the type of line of credit. For example, Commercial(Unsecured), Commercial(Secured), or Commercial(Real Estate).
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In the Borrower Information section, do one of the following:
Select the New Account checkbox if the borrower is a new customer.
For existing customers, select on the search icon in the Account field and select the account or business name.
For an existing account, you can modify the displayed information if needed.
If you have selected the New Account checkbox, specify the field values as described in the Business Entity Information section of the field reference table.
Specify the field values as described in the Business Address section of the field reference table.
Specify the field values as described in the Shipping Address section of the field reference table.
Specify the field values as described in the Add to Credit Line section of the field reference table.
Specify the field values as described in the Loan Information section of the field reference table.
Specify the field values as described in the Key Dates section of the field reference table.
Specify the field values as described in the Interest Information section of the field reference table.
Specify the field values as described in the Payment Information section of the field reference table.
Specify the field values as described in the Loan Codes section of the field reference table.
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Select Save. An application ID is generated.
As the next step, you must define the borrowing parties in Q2 Origination, capture their business information and assess their creditworthiness. Following this, you need to score the application as per the required criteria and price the application. Once the applicant approves the pricing, you can verify the documentation is completed by the user and all obligations are met, and convert the application into a formal contract.
Field reference
| Field Name | Description |
|---|---|
Record Type of new record |
The lending product for which you are creating the application. This can be a Lease, Line of Credit, or Loan. |
| Select Product section | |
CL Product |
The type of Line of Credit being applied for. This is based on the record type selected. This is a mandatory field. |
| Asset Class Name | A grouping of products with similar characteristics. For example, you may group loans for the purchase or construction of commercial properties like hotels or hospitals or renovation of business complexes under asset-class Commercial Real Estate. |
| New Account | Checkbox to indicate whether the applicant is a new account or an existing customer of the lending organization. |
| Account | The name of the applicant. In case the loan is for an organization, this signifies the primary contact person of that organization. |
Account Name |
The name of the account holder. |
Legal Entity Type |
The legal entity is used in Q2 Origination, to determine whether a borrowing entity (Party) associated with a loan opportunity is a business or individual relationship. Based on the legal entity, the system determines the fields that are displayed in the borrower management wizard. |
Account Fax |
The fax number of the Business. |
Account Phone |
The phone number of the Business. |
| Tax ID | The Tax ID is an identifying number used for tax purposes. |
Business Legal Name |
The business legal name of the entity. |
NAICS Code |
The North American Industry Classification Code of the business entity. |
NAICS Description |
The description of the NAICS code selected in the NAICS code field of the business entity. |
Organization ID Number |
The organization Identification number. |
State of Incorporation |
The state of incorporation of the business. |
Doing Business as (DBA) Name |
The doing business as name. |
Date Business Established |
The date on which the business was established. |
Non-Profit Organization |
select this checkbox if the entity is a non-profit organization. |
Required Number Of Signers |
The required number of signers for the business. |
Billing Street |
The billing address details. |
Billing City | |
Billing State/Province | |
Billing Zip/Postal Code | |
Billing Country | |
Shipping Street |
The shipping address details. |
Shipping City | |
Shipping State/Province | |
Shipping Zip/ Postal Code | |
Shipping Country | |
| Parent Application | Specify the Parent Application if you have created any credit line application. |
| Credit Limit | The credit limit is the maximum advance amount that can be given to the borrower at any point in time. |
Company |
Displays the selected Company. |
| CL Purpose | The primary purpose of the application. |
Primary Source of Repayment |
The primary source from which the borrower is expected to repay the loan. |
Secondary Source of Repayment |
The alternative or additional source from which the borrower may repay the loan. |
Status |
The status of the loan. |
Expected Start Date |
This field represents the date on which the application is created or started processing(for backdated applications) |
| Expected Close Date | This field represents the date on which the application processing is expected to complete |
Expected First Payment Date |
The expected first payment date of the loan. |
Maturity Date |
The date of the maturity of a loan. |
Participation Date |
This is the date on which another financial institution may contribute to a loan. In participation, several banks may contribute to fund say, a large commercial loan and share the returns as well as the risks. |
Disbursement Date |
The Disbursement Date of the loan amount. |
Interest Rate |
The Interest Rate of the loan. |
Interest Calculation Method |
The interest calculation method. The supported options are:
|
Spread |
This is the difference between the average yield received by the organization from loans and other interest-generating activities and the average rate paid on deposits and borrowings. |
Margin |
This is the fixed percentage rate added to an index value to determine the fully indexed interest rate for a variable-rate loan. |
Interest Only Period |
The Interest Only period, if any. |
Discount Rate |
Any Discount Rate that is applicable to the current interest rate. |
Discount Rate Based On |
Select the criteria the Discount Rate is Based On. This can be the Number of Payments or the Ending Date. |
Term |
The loan term. |
Amortization Term |
The Amortization Term over which the borrower payments can be spread. If this is shorter than the loan term, it results in the last payment being a balloon payment. |
Days Convention |
The number of days convention of the loan. The supported options are:
Note:
The value of this field is copied from the product in the application. |
Payment Amount |
The Payment Amount on the loan. |
Rate Floor |
The Rate Floor for a loan.
Note:
The value of this field is copied from the product in the application. |
| APR | The annual percentage rate (APR) is the annual rate charged for borrowing or earned through an investment. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan. |
| Draw Term | This is the period in which the amount can be disbursed to the user. |
Payment Frequency |
Select the loan Payment Frequency.
|
Balloon Payment |
Any Balloon Payment that the borrower is making. |
Prepayment Penalty |
Select the Prepayment Penalty checkbox if a penalty must be applied in case the borrower prepays the loan. |
Prepayment Penalty Description |
Provide the Prepayment Penalty Description if the prepayment penalty is applicable. |
Rate Ceiling |
The rate ceiling for a loan.
Note:
The value of this field is copied from the product in the application. |
Call Code |
The call code for CRA reporting. |
Class Code |
The class code to identify the loan or lending product type. |
Portfolio Code |
The portfolio code if the loan is included in a portfolio of related loans. |
Primary Collateral Code |
The primary collateral code, if any, to identify the type of collateral. |