NetLoan - Loan Type Configuration

CONFIGURE LOAN TYPES

NetLoan enables users to set up multiple loan types which allow for separate mapping of transactions to your chart of accounts.

Prerequisite: All required accounts should already be set up and configured in the chart of accounts.

STEP-BY-STEP PROCESS

Navigate to the loan type setup page by accessing NetLoan > NetLoan Setup > Manage Loan Types.
Select the New NetLoan Type button to bring up the loan type setup page.
Complete the Primary Information section by filling out the following information on the form:

Field	Required?	Description	Example
Name	Yes	Name for loan type	Construction Loans, Real Estate Loans, Bridge Loans, Equipment Financing Loans, SAFE Loans, Convertible Loans, etc.
Entity Type	Yes	Select whether the company is a lender, a borrower, or both on loans of this type.	Borrower
Loan ID Prefix	No	When creating new NetLoan Loan records, the system will use this Loan ID Prefix for the Loan ID. Note: The global Auto-Numbering Preference must be set to "Loan Type Prefix" as a prerequisite for this to run on the creation of new loans. The default preference is to use the "LN" prefix. Navigate to NetLoan > NetLoan Setup > System Setup > Loan Origination to set the Auto-Numbering Preference to "Loan Type Prefix."	LOAN

Complete the Amortization Schedule Structure section by filling out the following information on the form:

Field	Required?	Description	Example
Loan Schedule Type	Yes	Indicate the way to create the amortization schedule for the loan. Simple: Assumes an evenly distributed flow of payments. Precision: Incorporate the specific dates that payments were made within the month. Uneven distribution of payments.	Precision
Loan Term Unit	No	Indicate the unit over which the loan term should be calculated. Active Accounting Periods - The number of accounting periods that the loan is active. Months (From Origination Date) - The number of months that the loan is active from the Origination Date. Payments (From Initial Payment Date) - The number of payments that the loan has from the Initial Payment Date.	Active Accounting Periods
Default Custom Accounting Calendar	No	Select a custom calendar to default onto the loan. Most commonly used to produce amortization schedules that conform to non-standard accounting calendar (4-4-5, 5-5-4, etc.). Can be overridden at the loan level. Note: Custom Calendars will need to be enabled for this field to appear. You can navigate to this field by going to NetLoan > NetLoan System Setup > System Setup . System Features > Custom Calendars.	4-4-5 Calendar

Field

Required?

Description

Example

Loan Schedule Type

Yes

Indicate the way to create the amortization schedule for the loan.

Simple: Assumes an evenly distributed flow of payments.

Precision: Incorporate the specific dates that payments were made within the month. Uneven distribution of payments.

Precision

Loan Term Unit

Indicate the unit over which the loan term should be calculated.

Active Accounting Periods - The number of accounting periods that the loan is active.

Months (From Origination Date) - The number of months that the loan is active from the Origination Date.

Payments (From Initial Payment Date) - The number of payments that the loan has from the Initial Payment Date.

Active Accounting Periods

Default Custom Accounting Calendar

Select a custom calendar to default onto the loan. Most commonly used to produce amortization schedules that conform to non-standard accounting calendar (4-4-5, 5-5-4, etc.). Can be overridden at the loan level.
Note: Custom Calendars will need to be enabled for this field to appear. You can navigate to this field by going to NetLoan > NetLoan System Setup > System Setup . System Features > Custom Calendars.

4-4-5 Calendar

Complete the Billing Information section by filling out the following information in the form:

Field	Required?	Description	Example
Default Billing Day	Yes	The default day the loan will be invoiced each month.	1st
Default Payment Terms	No	The default payment terms for bills generated from loans. 1% 10 Net 30 - 1% discount if bill is paid within 10 days, otherwise amount is due within 30 days. 2% 10 Net 30 - 2% discount if bill is paid within 10 days, otherwise amount is due within 30 days. Due on receipt - Amount is due on receipt. Net 15 - Amount is due within 15 days. Net 30 - Amount is due within 30 days. Net 60 - Amount is due within 60 days.	1% 10 Net 30
Loan Payment Billing Item	No	Select the non-inventory item that NetLoan should use when generating automated bills/invoices. If this is a borrower loan type, then the billing item selected will need to be a non-inventory item for purchase. If this is a lender loan type, select a non-inventory item for sale. Make sure the item is mapped to the payment clearing account selected below instead of an income/expense account. Prerequisite: Only required when the automated billing feature is enabled in the system setup.	Loan Payment Billing Item
Loan Disbursement Item	No	The item used to bill vendors upon disbursement modifications	Loan Disbursement Item
Loan Fee Billing Item	No	Select the non-inventory item that should be used when NetLoan generates bills for custom fees. Make sure the item is mapped to the payment clearing account selected below instead of an income/expense account. Prerequisite: Only required when the automated billing feature is enabled in the system setup.	Loan Fee Billing Item
Loan Payment Interest Item	No	Select the non-inventory item that should be used when NetLoan generates bills that include interest income. Make sure the item is mapped to the payment clearing account selected below instead of an income account. Prerequisite: Only required when the automated billing feature is enabled in the system setup	Loan Interest Expense Item
Loan Payment Principal Item	No	Select the non-inventory item that should be used when NetLoan generates bills that include note receivable adjustments (principal). Make sure the item is mapped to the payment clearing account selected below instead of an income/expense account. Prerequisite: Only required when the automated billing feature is enabled in the system setup.	Loan Principal (Borrower) Item

Complete the Calculation Type & Timing section by filling out the following information in the form:

Field	Required?	Description	Example
Loan Calculation Timing	No	Indicate how often you would like the schedule calculation type calculation to trigger. A calculation type of "Calculate Payment" will calculate the payment based off of a known APR. A calculation type of "Calculate Rate" will calculate the APR based off a known monthly payment amount. A calculation type of "Default" will allow input of both APR and payment adjusting the loan term and/or balloon payment if necessary to pay off the full balance of the loan.	On Field Change
Default Initial Schedule Calculation Type	Yes	A calculation type of "Calculate Payment" will calculate the payment based off of a known APR. A calculation type of "Calculate Rate" will calculate the APR based off a known monthly payment amount. A calculation type of "Default" will allow input of both APR and payment adjusting the loan term and/or balloon payment if necessary to pay off the full balance of the loan. The schedule calculation type defaulted on the Loan when the Lease Type is selected can be overridden.	Default
Default Schedule Modification Calculation Type	No	A calculation type of "Calculate Payment" will calculate the payment based off of a known APR. A calculation type of "Calculate Rate" will calculate the APR based off a known monthly payment amount. A calculation type of "Default" will allow input of both APR and payment adjusting the loan term and/or balloon payment if necessary to pay off the full balance of the loan. This can be overridden at the modification level.	Default

Complete the Initial Payment Timing section by filling out the following information in the form:

Field	Required?	Description	Example
Initial Payment Calculation Type	No	The method used to automatically set the initial payment date. Set Payment Day From Initial Payment Date - When you have the Initial Payment Date populated, the system will automatically populate the Payment Day based on the day from the Initial Payment Date. Set Initial Payment Date From Payment Day - When you have the Payment Day populated, the system will automatically populate the Initial Payment Date. Neither - With this setting, does neither the "Set Payment Day From Initial Payment Date" option and the "Set Initial Payment Date From Payment Day" option. When you update one field, the other field will not update. Both - With this setting it does both the "Set Payment Day From Initial Payment Date" option and the "Set Initial Payment Date From Payment Day" option. When you update one field, the other field will update.	Set Payment Day from Initial Payment Date
Initial Payment Periods In Arrears	No	The number of periods from origination date by which the loan is in arrears.	2
Initial Payment Periods In Arrears Units	No	The unit of measure for the initial payment periods in arrears.	Months

Complete the Interest Information section by filling out the following information in the form:

Field	Required?	Description	Example
Default Day Count Convention	Yes	Convention to determine the interest calculation. 30/360: Calculates the daily interest using a 360-day year and then multiplies that by 30 (standardized month). 30/365: Calculates the daily interest using a 365-day year and then multiplies that by 30 (standardized month). Actual/360: Calculates the daily interest using a 360-day year and then multiplies that by the actual number of days in each time period. Actual/365: Calculates the daily interest using a 365-day year and then multiplies that by the actual number of days in each time period. Actual/Actual: Calculates the daily interest using the actual number of days in the year and then multiplies that by the actual number of days in each time period.	30/360
Default Interest Capitalization Frequency	Yes	The frequency unpaid interest is added to the principal balance of your loan. Can be overridden at the loan level. Never - Never capitalizes accrued interest into the loan balance. Period end - Capitalizes accrued interest into the loan balance on the period end date. Payment date - Capitalizes accrued interest into the loan balance on the payment date. Always - Capitalizes accrued interest into the loan balance each payment day and period-end date. Quarterly - Capitalizes accrued interest into the loan balance quarterly. Annually - Capitalizes accrued interest into the loan balance annually.	Never
Origination Date Timing	No	Select the time of day that loans under this type should originate. This determines whether interest is calculated for the day of origination.	Beginning of Day
Maturity Date Timing	No	Select the time of day that loans under this type should mature/be paid off. This determines whether interest is calculated for the day of maturity/payoff.	End of Day
Default Variable Rate Index	No	The default index rate to be applied to the loan. Can be overridden at the loan level.	CPI

Complete the Payment Information section by filling out the following information in the form:

Field	Required?	Description	Example
Default Payment Day	Yes	The default day the loan will have it's payments posted within the month if no payment records are present and no payment day has been overridden on the loan record itself.	31st
Default Payment Timing	No	The default type of payment applied to the loan. Can be overridden at the payment level.	Standard
Default Payment Frequency	No	The default payment frequency of the calculated payment on the header of the loan.	Monthly
Default Payment Time of Day	No	The default time of the day the payment is applied to the loan balance. Can be overridden at the loan payment record level.	End of Day
Default Business Day Calendar	No	Select the default calendar used by loans under this type to determine if a payment date needs to be adjusted due to a holiday or weekend. This can be overridden on the loan level.	US Federal Holidays
Default Business Day Convention	Yes	Affects which days loan payments post (and therefore affects interest calculations) when the expected payment day falls on a weekend or a holiday. Can be overridden at the loan level. Unadjusted - On the original day that falls on a weekend or holiday. Following - On the following day after the weekend or holiday. Mod-following - The following day unless it falls into the following month and then it would shift to the day before. Preceding - On the preceding day after the weekend or holiday. Mod-Preceding - The preceding day unless it falls into the preceding month and then it would to the day after.	Unadjusted
Default Payoff Modification Time of Day	No	Select the default value for Payoff Remaining Modification's Payment Time of Day. Selected value overrides the Payment Time of Day selected on the Loan, Loan Type, and NetLoan Settings records, but can be overridden at the point of modification.	Beginning of Day

Note: Loan types can be set up to default the calculated variable (whether rate or payment is a known input) and default payment timing (whether payments are made at the beginning of month or end of month) on the loan. These settings can be overridden on individual loans.

Complete the Account Mappings sections for both the Borrower and Lender by mapping each account to the corresponding or appropriate account in your chart of accounts.
1. The fee amortization method (straight line, effective interest : loan principal, effective interest : loan principal - fees/discount/premium). This defines the method in which the fee/discount/premium is amortized.
  - Straight Line: evenly amortizes the fee/discount/premium over the life of the loan.
  - Effective Interest : Loan Principal: each period, the fee/discount/premium is amortized by calculating the difference in interest between using the effect interest rate and the APR as applied on the loan balance.
  - Effective Interest : Loan Principal - Fee/Discount/Premium: each period, the fees/discount/premium is amortized by calculating the difference in interest between using the effect interest rate as applied on the loan balance after subtracting out fees and discount/premium and the APR as applied on the loan balance.
When you have completed all the needed fields don't forget to click the Save button.
Refer to the Pre-Installation/Configuration Accounting Decisions article for additional details related to each account type.

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