To configure an umbrella loan product, go to:

1. Loans > Products > Loan products.

2. On the loan products page, click the Add new product button.

1. Fill in the umbrella-specific loan product parameters:

Umbrella loans have a simplified lifecycle and do not require loan application or offer. Once an umbrella loan product is created, you can create an umbrella loan contract and and add sub-contracts under it.

Create umbrella loan contract

1. Find the person record of a borrower:

   • Persons > Search.

   • Click the Person name to access the person details.

2. Create umbrella contract:

   1. From the content menu choose Loans > Loan contracts.

   2. On the Loan contracts page click the Create button.

1. Fill in umbrella loan contract parameters:

   • Define the Contract amount that will be divided between the sub-contracts.

   • Define the Payment conditions.

1. Click Create to finalise the umbrella loan contract setup.

Activate umbrella contract

Once an umbrella contract is created, it is set to the DRAFT status and needs to be activated. To do that:

1. Find the umbrella contract:

   • Via Persons module,

   • Via Loans module.

1. Scroll to the Components block and click the Confirm button.

Create sub-contracts

You can proceed with the sub-contracts only after the umbrella contract is created. To create the sub-contract:

1. Find the umbrella contract:

   • Via Persons module,

   • Via Loans module.

1. Create sub-contract:

   1. From the content menu choose Sub-contracts.

   2. On the Sub-contracts page, click the Create sub-contract button.

About umbrella loans

An umbrella loan, or umbrella credit facility, is a type of loan that provides a customer with a larger credit limit. This limit allows multiple loan contracts to be issued under a single structure.

The purpose of umbrella loans is to simplify the loan contract creation process. Once the umbrella contract is signed and created, individual loan contracts can be created under the umbrella loan limit without through the loan application and offer phases.

Umbrella loan structure

The umbrella loan operates in two levels:

• Umbrella loan contract - Defines the overall credit limit.

• Sub-contracts - Individual contracts that are issued within the umbrella limit.

Umbrella loan contract level

The umbrella loan contract has its own conditions and fees. One of which is an interest on unused limit. This parameter is calculated as the bank is signing a limit contract without any disbursement of principal but have reserved capital for potential disbursement. The interest on unused limit is calculated daily and can be invoiced monthly along with the rest of the loan contract fees.

Sub-contracts level

The sub-contracts are regular loan contracts that can be created for different loan products. For example, installment loan, revolving or non-revolving credit line contracts. The sub-contracts have their own lifecycle, invoicing and repayment terms. The primary reason for linking the sub-contracts to the umbrella loan contract - is to ensure that the total sub-contract limits do not exceed the overall umbrella limit.

Umbrella loans types

Umbrella loans can be either revolving or non-revolving:

• Revolving - Once the sub-contract is repaid, the repayment amount becomes available again on the umbrella level and can be used for issing new loans.

• Non-revolving - The sub-contract limit can be used once and does not become available again after repayment.

Revolving umbrella loan use case

In this use case, we will review the umbrella loan flow with revolving umbrella and non-revolving loan limits.

Use case details

To review the loan flow, we will follow these steps:

1. Create and activate a revolving umbrella contract with an available limit = 1000000 EUR.

2. Add a non-revolving sub-contract to the umbrella with a sub-limit = 200000 EUR.

3. Repay sub-contract in full = 200000 EUR.

4. Close the sub-contract.

Use case calculation