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.

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.

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.

After submitting the document, it creates Loan Repayment Schedule as shown below:

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.