Use Oracle Loans to create and track loan applications, from origination to payoff. • You can create an application for a borrower.
• You can create an application for one or more existing receivables in the same currency in Oracle Receivables.
Note: Set the class for the loan to Direct Loan or Extended
Repayment Schedule to determine which create flow to use, based on your organization's business process.
Creating a loan involves two processes:
1. Creating the loan application.
To create a direct loan application for a borrower:
1. From the Loans dashboard, click Create Loan. See: Using the Loans Dashboard, page 2-4.
2. Enter the general loan information.
• Select a Loan Product with Direct Loan Class.
The loan product selected for a loan sets the Type, Operating Unit and Loan Currency to be used with the loan product. The Loan Type and Class determine the accounting distributions recorded when the loan is created, funding is approved, and loan payments are billed.
For further information, see: Setting up Loan Types, page 1-9 and Setting up Loan Products, page 1-17.
• Select a Legal Entity, Application Date, Loan Purpose and assign a Loan Officer.
Note: The Application Date defaults to the current date. You may change it if you wish to display a date before or after the current date.
3. Enter the borrower information by searching for an existing borrower. If the borrower does not exist, you can:
• Create an organization • Create an account number
• Create an address to be used as the primary billing address.
Tip: To search for an address for an existing borrower, the customer must have a Bill To address set up in Oracle Receivables.
• Primary Contact
4. Enter loan details, such as: • Requested Amount
Note: The Requested Amount defaults to the minimum requested amount set in the loan product.
• Term Start Date • Term
Note: The Term defaults to the minimum term set in the loan product.
• Balloon Payment Type
Note: When creating a loan with a term type balloon payment, enter a balloon term that is longer than or equal to the loan term.
Note: When creating a loan with an amount type balloon payment, enter a balloon amount greater than the requested loan amount.
• Subtype
Note: Subtype indicates whether the loan is secured by collateral. If you select Secured, enter the loan-to-value ratio required for the loan in Collateral Percentage.
5. Enter the rates.
Select an index type, payment frequency, interest rate index and effective date. Loans defaults the index rate percentage based on the index rates you set up in Loan Administration. You can override the defaulted index rate if necessary. See Setting Up Interest Rates, page 1-7.
The interest rate for the loan is the total of the index rate percentage and the spread percentage, if any. If the loan has multiple interest rates, the interest rate percentage is the initial interest rate for the loan.
Select the payment frequency for the loan.
Note: When you first create a loan application, the term type is fixed. To create a variable rate loan, update the interest rate on the Origination tab after you save the application. See Updating a Loan.
6. Click Save and Add Details. Loans creates the application and navigates to the Origination tab, where you can update the application. See: Updating a Loan, page
2-10.
Or, click Apply. Loans creates the application and navigates back to the dashboard.
Note: When you create an application, the loan status defaults to Incomplete.
To create a loan application from an existing receivable:
1. From the Loans dashboard, click Create Loan. See: Using the Loans Dashboard, page 2-4.
2. Enter the general loan information.
• Select a Loan Product with ERS Loan Class.
The loan product selected for a loan sets the Type, Operating Unit and Loan Currency to be used with the loan product. The Loan Type and Class determine the accounting distributions recorded when the loan is created, funding is approved, and loan payments are billed.
• Select a Legal Entity, Application Date, Loan Purpose and assign a Loan Officer.
Note: The Application Date defaults to the current date. You may change it if you wish to display a date before or after the current date.
3. Select a borrower for the loan and then add one or more outstanding receivables. The outstanding receivables must be in the same currency as the loan.
Enter the amount of each receivable that will be used to create the loan. The amount cannot exceed the current receivable amount.
Click Derive to pull in all transactions that match the rule setup based on the selected loan product and customer in the loan creation page. The balance amounts on the transactions will be used to create the payment plan.
Note: When you create a loan for an existing receivable, Loans will automatically adjust the original receivable with the amount of the loan. See: Approving a Loan, page 2-25.
4. Add the borrower details.
• Transaction type
Select a transaction type for billing. • Term Start Date
• Term
• Balloon Payment Type
Note: When creating a loan with a term type balloon payment, enter a balloon term that is longer than the number entered for term of the loan.
Note: When creating a loan with a amount type balloon payment, enter a balloon amount greater than the amount entered in the Requested Amount field .
• Subtype
Subtype for a loan to indicate whether the loan is secured by collateral
6. Enter the rates.
Select an interest rate index and effective date. Loans defaults the index rate
percentage based on the index rates you set up in Loan Administration. See: Setting Up Interest Rates, page 1-7.
The interest rate for the loan is the total of the index rate percentage and the spread percentage, if any. If the loan has multiple interest rates, the interest rate percentage is the initial interest rate for the loan.
Select the payment frequency for the loan.
Note: When you first create a loan application, the term type is fixed. To create a variable rate loan, update the interest rate on the Origination tab after you save the application. See: Updating a Loan, page 2-10.
7. Click Save and Add Details. Loans creates the application and navigates to the Origination tab, where you can update the application. See: Updating a Loan, page 2-10. Loans automatically adjusts the original receivable when the completed loan application is approved. See: Approving a Loan, page 2-25.
Note: When you create an application, the loan status defaults to Incomplete.