Loan Management Process
ERPNext provides the Loan Management feature for managing Loan given by the company to employees.
The Loan Management System in ERPNext Involves several steps to follow:
1. For this, first you need to create the loan type where you need to fill the mandatory fields i.e. Loan Name, Rate of interest (%) Yearly. Here you can also define the Maximum Loan Amount and description if any.
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2. Once this is done, Employee can apply for a loan. To apply for a Loan, fill Applicant Type, Applicant, Loan Type, Loan Amount and Repayment Method.
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3. Now, Loan Approver needs to create Loan for respective Loan application. He/She has to fill Repayment Start Date, Mode of Payment, Payment Account, Loan Account, Interest Income Account, and some mandatory fields. Initially, The loan status is sanctioned. There is a checkbox 'Repay from Salary' which provides an option to the employee to repay the loan amount from his salary.
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After submitting the document, it creates Loan Repayment Schedule as shown below:
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4. Now, you need to create the Disbursement Entry. By clicking the 'Create Disbursement Entry; at the top right corner of the Loan Document. This creates a Journal Entry For Loan Disbursement.
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