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The “Loan Agreement” module contains the contractual agreements of the loansa loan. They determine the following aspects of a loan:
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From a timeline perspective, a loan agreement has different phases that need to be considered separately:
- Loan loan application
- Loan loan commitment
- Loan loan agreement
In order for a loan agreement to be legally effective, a loan application by the borrower unit, a loan commitment by the bank and an acceptance of the commitment by the applicant are always required. Only after a positive loan decision by the bank and acceptance of the bank’s loan offer by the borrower unit, the loan agreement is concluded.
Depending on the specific loan product, this process can be individually customised in the software to the respective requirements in the software. Customisation ranges from changing the responsibility of a role in the approval process to merging different steps. For retail deals for example, e.g., a binding offer can already be submitted directly in the context of presented directly while recording the financing request. The loan agreement is then concluded based on highly standardised conditions the moment the financing request is submitted.
Loan application
The loan application is submitted by the borrower unit applies for the loan and the application generally describes the respective financing requirements. In the context of the loan application, information of the borrower unit that is relevant to the bank’s application review is also collected. Collateral data is collected as well.
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The loan commitment is the last step of the approval process. The approval process includes the assessment of creditworthiness and capturing and evaluating valuating collateral.
Commitments can be made bindingly or revocably. This has an impact not only on the outpayment obligations of the bank, but also on risk provisions and accounting.
The loan commitment makes the loan agreement legally binding.
In the software, multiple lending operations can result from a single loan commitment can result in multiple lending operations. Or, in other words: A loan agreement can include multiple lending operations. Whether or not a loan commitment results in multiple lending operations depends on the complexity of the product. If several outpayments are foreseen for a loan agreement, each with separate repayment and interest terms, it is advisable to map a separate lending operation for each outpayment within the framework of a joint loan commitment/agreement. If only several outpayment dates are foreseen, which just act like capital increases with under the same conditions, the loan agreement can be mapped as a single lending operation. This also applies if the conditions change over time, but these changes do not have to be split proportionally between historical outpayments.
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Expected incoming payments are monitored, overdue payments er are identified and days past due are calculated.
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For all lending operations for which collateral may generally be used, the current value of the collateral is allocated. There are two supported methods for allocating an item of collateral to several loans: “Rank” and “Value”. With the “Rank” method, on the reference date, the value of the collateral is successively allocated to the assigned loans depending on the rank of these loans, and with the “Value” method, each loan is allocated a fixed amount of the collateral value.
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Additional agreements can be added to the loan agreement. If compliance needs to be monitored checked regularly, follow-ups can be set up, notes can be entered and documents can be uploaded.
Thus, for example, a commitment by the borrower unit can be implemented to regularly provide information, e.g. by means of quarterly reports, can be implemented, or a commitment to comply with defined financial requirements can be monitored and documented, e.g. regarding the maximum debt as measured using the leverage ratio, can be monitored and documented.
If necessary, the additional agreements can be suspended and a fee can be charged for the suspension.
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The “Loans” module can be integrated into any technical and organizational organisational infrastructure.
Configurations are carried out on a “product” basis. Processes are modelled via workflows.
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