When a loan is granted, the amount can be disbursed in several ways. In the “Disbursement Option” settings, you can define how and where the funds will be disbursed.
Multiple disbursements (credit line)
Enable the “Multiple disbursements (credit line)” toggle to convert your Credit Product into a Credit Line, allowing for multiple disbursements up to a set limit.
For instance, you can set a Credit Line Limit of $1,000 and specify an Initial Disbursement amount. Borrowers can draw funds as needed within this limit, with the repayment schedule adjusting accordingly. Interest and fees are based on the outstanding balance, providing flexibility for the management of finances.
Additionally, back-office users can modify the credit line limit as necessary, ensuring the repayment schedule updates to reflect any changes. For more details, see Credit Lines.
Disbursement Type
When setting up a Credit Product, you can choose from several disbursement types to determine how funds will be provided:
Disbursement to the Customer: Funds are directly transferred to the Customer’s account. This method is commonly used when the Customer needs immediate access to the loan amount for personal use or expenses.
Disbursement to the Vendor: Funds are sent directly to a vendor or supplier. This type of disbursement is typically used for loans designated for specific purchases, such as buying equipment, vehicles, or other goods and services from a supplier.
Virtual Disbursement: Funds are managed virtually within the system, without a direct transfer of cash. This type of disbursement is useful for internal accounting purposes, setting up funds for future stages, managing non-cash transactions. etc.