Apache Fineract: Loan Management

Apache Fineract offers a robust and flexible loan management system designed to cater to diverse lending needs. Whether you're managing microloans, SME financing, or complex loan products, Fineract provides the tools necessary for efficient loan lifecycle management.

Loan Product Configuration

Fineract allows institutions to define loan products with customizable parameters:

• Interest Calculation Methods: Flat, declining balance, and more
• Repayment Schedules: Daily, weekly, monthly, or custom frequencies
• Grace Periods & Moratoriums: Configure initial periods with no repayments
• Amortization Types: Equal principal payments or equal installments
• Payment Allocation: Define how payments are allocated to principal, interest, fees, and penalties
• Multi-Currency Support: Manage loans in various currencies

Example: Creating a loan product with a declining balance interest method and monthly repayments

Repayment Schedule Types

Cumulative Schedule

• Definition: Installments are calculated based on the total loan amount, including planned future disbursements
• Use Case: Suitable when disbursement amounts and dates are predetermined

Progressive Schedule

• Definition: Installments are recalculated as new disbursements occur, considering only the disbursed amount
• Use Case: Ideal for scenarios like Buy Now Pay Later (BNPL) where disbursements are made over time

Disbursement Management

• Single or Multiple Disbursements: Disburse the loan amount in one go or in tranches
• Scheduled Disbursements: Plan future disbursements based on milestones or dates
• Disbursement Tracking: Monitor disbursed amounts and remaining balances

Example: A loan of $10,000 disbursed in two tranches of $5,000 each, with the second disbursement scheduled after project milestone completion

Arrears and Delinquency Management

• Delinquency Buckets: Categorize overdue loans based on the number of days past due
• Automated Penalties: Apply penalties automatically based on configured rules
• Alerts & Notifications: Generate alerts for loans entering delinquency

Example: A loan overdue by 45 days falls into the "30-60 days" delinquency bucket, triggering a penalty and alert to the loan officer

Loan Lifecycle Operations

• Application Processing: Submit, approve, reject, or withdraw loan applications
• Disbursement: Disburse approved loans as per schedule
• Repayments: Record repayments, including partial and bulk payments
• Rescheduling & Refinancing: Modify loan terms in response to borrower needs
• Write-offs: Write off loans deemed uncollectible
• Closure: Close loans upon full repayment or write-off