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This article covers the new Enhanced Funding tool. For info on the older tool, see our Fund a Loan article.
When you set up a loan, one of the most important tools available in LoanPro is funding, which keeps track of how you actually gave the money or collateral to the customer. The new, enhanced funding tool lets you fund a loan in one or more transactions, either to the borrower directly or through a source company. This article covers the process from start to finish in the UI.
You can also make funding transactions via the API (see API – Enhanced Loan Funding).
Advancement Use Case
Use Case: Funding/Advancements
Generally, lenders will fund loans shortly after they are approved. But sometimes a borrower will request additional money later on. Lenders who allow this might issue them an advancement, giving them more money and adding to their principal balance. But just like creating a loan in the software is different from funding a loan in the real world, logging an advancement will not automatically move real-world money into a borrower's hands.
LoanPro has two tools that work in tandem to solve this problem. The first is an Advancement, a transaction which increases a loan's principal balance. Advancements only affect the loan within LMS; they won't move real-world money. That's where the Enhanced Funding tool comes in. It lets you push real-world money from your account to a borrower's bank card or bank account, track funding done with cash or paper checks, or even fund a source company. We recommend connecting advancements and funding through a Process Wizard, so agents can ensure that the software reflects the real-world transaction you've made with your borrower.
Tranche Use Case
Use Case: Funding/Tranches
Some loans are funded all in one lump sum, but others receive funding in several stages (often called tranches, from a French word meaning cut). When a borrower receives each tranche, and whether they qualify to receive them at all, will depend on the loan contract. Sometimes each tranche will be guaranteed at a certain date, but in other cases the borrower will have to meet certain requirements, like paying back a portion of what has already been borrowed or completing part of a project (a model common in construction lending). It can be a headache to track when each loan qualifies for the next tranche and disburse the money.
In LMS, you can fund a loan in multiple transactions, to different accounts, and even through different payment methods (like a bank account, cash, or money sent directly to a vendor who then provides a good or service.) You can also use some of our loan labeling tools (like checklists or portfolios) to track how much funding different loans have received and whether they qualify for the next tranche. And although loans must be funded manually, our automated tools make it easy to see when loans qualify for the next tranche: rules applied can update those checklists or portfolios and trigger-based notifications can notify agents that a loan is ready for more funding.
First, you'll need to navigate to the funding page. From the Loan Manager, select a loan, then navigate to Account Setup > Setup Tools. Click the icon with the three horizontal bars to select the Enhanced Funding tool.
The funding page lists funding transactions, and each entry tells who was funded how much, the payment method and the date, as well as some basic info like a transaction ID, category, and whether it was successful.