Loan Application
Loan Application is the formal borrower request record used for evaluating and processing a loan request. It captures applicant details, selected loan product, requested amount, repayment information, co-applicants, supporting documents, and collateral details for secured loans.
Loan Application acts as the foundation for credit evaluation, approval workflows, and loan creation in Frappe Lending.
Did You Know?
Approved Loan Applications can be converted into actual Loan records while carrying forward important borrower, repayment, and collateral information.
Accessing Loan Application
Loan Applications can be managed from the Lending workspace:
Home > Lending > Loan > Loan ApplicationPrerequisites
Before creating a Loan Application, ensure the following are configured:
- Company and Loan Product setup.
- Applicant details (Customer or Employee).
- Loan purpose, if required by the lending process.
- Document checklist and co-applicant details, if applicable.
- Collateral setup and security prices for secured loans.
Creating a Loan Application
Follow these steps to create a new Loan Application:
- Open the Loan Application List and click Add Loan Application.
- Select the Applicant Type and enter applicant details.
- Select the Company and Loan Product.
- Enter the requested Loan Amount and review repayment details.
- For secured loans, add Proposed Pledges.
- Add co-applicants and supporting documents where required.
- Save and Submit the application.
Repayment Details for Term Loans
For term loans, repayment configuration can be defined using different repayment methods.
| Repayment Method | Description |
|---|---|
| Repay Over Number Of Periods | Repayment is calculated based on the selected loan tenure or number of installments. |
| Repay Fixed Amount per Period | Repayment is calculated based on a fixed repayment amount for each cycle. |
The system validates consistency between loan amount, interest rate, repayment amount, and tenure inputs before allowing the application to proceed.
Secured Loan Details
When Is Secured Loan is enabled, collateral information becomes part of the loan evaluation process.
For secured applications:
- Proposed pledges are required.
- Security quantity and price are used to calculate collateral value.
- Haircut rules are applied to determine eligible loan value from pledged securities.
- The maximum eligible loan amount is calculated based on proposed collateral.
Applicant and Duplicate Handling
Loan Application helps manage borrower records by identifying existing applicants using available contact details.
For customer-based applications, existing borrower information can be reused where applicable to avoid creating duplicate customer records.
Company and Policy Validations
Loan Application performs validations to ensure applications follow configured lending policies.
| Validation | Description |
|---|---|
| Loan Product Company Check | Ensures the selected loan product belongs to the selected company. |
| Loan Amount Limit | Validates that the requested amount is within configured product-level limits. |
| Collateral Eligibility | For secured loans, verifies that requested amount does not exceed collateral-backed eligibility. |
| Sanctioned Limit Check | Checks application amount against applicant-level sanctioned loan limits when configured. |
Application Approval and Execution
After approval, Loan Application supports further operational steps:
| Action | Description |
|---|---|
| Create Loan | Creates the actual Loan record from the approved application. |
| Create Loan Security Assignment | Creates collateral assignment records for secured loan applications. |
Loan Application Workflow
A typical loan application journey includes the following stages:
| Stage | Purpose |
|---|---|
| Application Creation | Captures borrower request and required loan details. |
| Credit Evaluation | Reviews eligibility, repayment capability, and collateral where applicable. |
| Approval | Confirms acceptance based on lending policies. |
| Loan Creation | Converts approved application into an active loan account. |
Use Cases
Loan Application can be used for:
- Managing borrower loan requests.
- Performing credit evaluation before loan booking.
- Capturing secured and unsecured lending details.
- Managing co-applicants and supporting documents.
- Creating loans after approval.
Note
Loan Application validations depend on configured Loan Products, company policies, sanctioned limits, and collateral rules.
Best Practices
- Complete applicant information before submitting applications.
- Configure loan products with accurate limits and repayment rules.
- Maintain updated security prices for secured lending decisions.
- Attach required documents before approval.
- Review collateral eligibility before creating secured loans.
