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DEFERRED LOANS

The first step is to establish the Loan Master file as usual.  If the loan is to accrue no interest during the deferred period, select Amortized as the interest calculation method.  By doing this, the first payment posted will allocate interest based on only one payment cycle, usually one month.  If interest is to accrue and be paid when payments begin, select Daily Interest.  If Daily interest is chosen, be prepared to see a large portion of the first payment going to interest, as the program will collect interest from the disbursement activity date until the activity date of the first payment.

NOTE: If closing documents indicate daily interest, but that interest is not to accrue, select Amortized as the interest method until the first payment is posted.  After that payment is posted, edit the master file to Daily interest.  Any future payments will then calculate interest from activity date to activity date.

Within the Loan Master file there is field titled “First Due Date”.  This is the field in which the date the first payment is actually due is entered.  Delinquency reports and several pertinent supplements will take this date into consideration when determining if a loan payment is late.  It will not be considered late until the “First Due Date” has passed.  Also, be certain when entering the disbursement to enter an accurate Next Payment Due Date.

There is a pre-established status code included in the programming for Deferred loans.  Although choosing the appropriate status code for each Loan Master file is always your option, consider using the Deferred code.  By doing this, those loans can be excluded from statistical reports if desired.

Another option is to establish an Optional Field to hold the date interest and/or principal payments are to begin.  This can be utilized to create “tickler files” to assist staff in monitoring deferred loans.  The date entered within the Optional Field can be accessed by utilizing Master File Query or Quick Date Listings.
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Also, when posting the Disbursement in the Loan Activity screen, be sure the Next Payment Due field reflects the date you expect to receive the first payment.  If you should save the transaction without advancing the date, you may go to Tools, Build History and correct the Next Payment Due Date there.

If you are changing the loan to Deferred Status after the client has been making payments, please see Loan Activity/Handling Special Situations/Deferred Loans for additional instructions.