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Loan Approval

Purpose

The Loan Approval workflow ensures that every loan application is reviewed and authorised by a responsible officer before funds are disbursed. This page explains how to review pending applications, approve or reject them, and record disbursement.

Who Can Access

Role Access Level
Administrator Full approval access
Committee Member Can approve and reject loans
Loan Officer Can recommend; may approve depending on settings
Auditor View-only

How to Open This Page

Sidebar → Loans → (find a Pending loan) → View

Or review pending loans from the Dashboard Pending Approvals panel.

Approval Workflow

flowchart LR
    A[Member / Staff submits application] --> B{Pending Review}
    B --> C[Loan Officer Reviews]
    C --> D{Decision}
    D -- Approve --> E[Approved — Ready for Disbursement]
    D -- Reject --> F[Rejected — Notified]
    E --> G[Disburse Loan]
    G --> H[Active Loan — Repayments Begin]

Reviewing a Loan Application

  1. Go to Loans in the sidebar.
  2. Use the Status filter to show Pending loans.
  3. Click 👁 View on the loan you want to review.
  4. The loan details page shows all application information.

What to Check Before Approving

  • ✅ Is the borrower an active, approved member?
  • ✅ Is the loan amount within the product's allowed limits?
  • ✅ Does the member have good repayment history (check their previous loans)?
  • ✅ Are all required guarantors in place?
  • ✅ Does the member's share capital / savings balance support the loan request?
  • ✅ Is the purpose of the loan acceptable?

Approving a Loan

  1. Open the loan details page.
  2. Review all the information carefully.
  3. Click Approve.
  4. A confirmation prompt appears — click Confirm.
  5. The loan status changes from Pending to Approved.

Rejecting a Loan

  1. Open the loan details page.
  2. Click Reject.
  3. Enter a reason for rejection (this is shown to the loan officer and recorded in the audit trail).
  4. Click Confirm Rejection.
  5. The loan status changes to Rejected. The applicant is notified.

Disbursing a Loan

After a loan is approved, funds must be disbursed to the borrower.

  1. Open the Approved loan's details page.
  2. Click Disburse.
  3. Confirm the disbursement amount, method (Cash, Bank Transfer), and date.
  4. Click Confirm Disbursement.
  5. The loan status changes to Active and the repayment schedule begins.

Disbursement is Irreversible

Once a loan is marked as disbursed, you cannot undo this. Ensure all details are correct before proceeding.

Recording Repayments

Once a loan is active and the borrower makes a payment:

  1. Open the loan details page.
  2. Click Record Repayment.
  3. Enter:
  4. Payment Amount — how much was received
  5. Payment Date — date the payment was made
  6. Payment Method — Cash, Bank Transfer, Salary Deduction, etc.
  7. Reference — optional receipt or transaction reference
  8. Click Save.
  9. The system updates the outstanding balance and marks the instalment as paid on the amortization schedule.

Tips

Check Savings Balance

Before approving a loan, check if the member's total savings can act as collateral. Members with higher savings balances are generally lower-risk borrowers.

Overdue Loans

If a member has an existing overdue loan, their new application should be reviewed carefully. Some loan products may automatically block applications from members with overdue loans.

Partial Repayments

The system accepts partial repayments. If a borrower can only pay part of their monthly instalment, record what was received. The system will track the shortfall.

Common Mistakes

Mistake How to Avoid
Approving without reviewing the guarantor details Always scroll down to check the guarantors section
Disbursing to the wrong member Double-check the member name before confirming disbursement
Forgetting to record disbursement After approval, disbursement must be recorded separately. The loan remains in "Approved" status until you disburse.

Frequently Asked Questions

Q: Can an application be re-opened after rejection?
A: No. A rejected application must be submitted again as a new application. The old application remains in the system for audit purposes.

Q: Who gets notified when a loan is approved?
A: The system can be configured to send SMS or email notifications. Check with your administrator.

Q: Can I partially approve a loan (approve a smaller amount than requested)?
A: Yes. Before approving, you can edit the loan amount if your role permits, then proceed with approval.