Loans & Advances Management

The Loans & Advances module helps you manage employee loans with automatic EMI deductions from salary.

Types of Loans

You can create different loan types based on your organization's policies:

• Personal Loan: General purpose loans for employees

• Emergency Loan: Quick loans for urgent needs

• Festival Advance: Advances given during festivals

• Salary Advance: Advance payment of upcoming salary

• Custom Loan Types: Create your own loan categories

Creating Loan Types

1. Configure Loan Types

• Go to Payroll → Configuration → Loan Types

• Click "Add Loan Type"

• Enter loan type details:

  • Loan Name: e.g., "Personal Loan"

  • Maximum Amount: Maximum loan limit

  • Interest Rate: Annual interest rate (if applicable)

  • Maximum Tenure: Maximum repayment period in months

  • Eligibility: Minimum service period required

• Click "Save"

2. Create & Approve Loans

   Creating a Loan:

   1. Go to Payroll → Loans & Advances

   2. Click "Add New Loan"

   3. Select employee

   4. Select loan type

   5. Enter loan details:

      • Loan Amount: Principal amount

      • Tenure: Repayment period in months

      • Interest Rate: (auto-filled from loan type)

      • Start Month: When EMI deduction should start

      • Reason: Purpose of the loan

   6. System calculates EMI automatically

   7. Click "Save as Draft"

   Approving a Loan:

   1. Admin/Partner reviews the loan request

   2. Clicks "Approve" or "Reject"

   3. Approved loans become active from the specified start month

   4. EMI deductions happen automatically during payroll generation

   EMI Calculation

   For Interest-Free Loans: EMI = Loan Amount / Tenure
   For Loans with Interest: EMI calculated using reducing balance method
   
   The system automatically calculates and displays the EMI amount before you save the loan.

   Automatic EMI Deduction

   Once a loan is approved:

   • System automatically deducts EMI during monthly payroll generation

   • EMI appears as a deduction in the payslip

   • Outstanding balance is updated after each deduction

   • Loan automatically closes when fully repaid

Important Notes

• If employee's net salary becomes negative due to EMI, system will alert you

• You can skip EMI for a particular month if needed (manual action required)

• Loan cannot be deleted once approved; it can only be closed

• For employees leaving mid-tenure, process final settlement separately

Loan Closure

Loans can be closed in two ways:

1. Automatic Closure

• When all EMIs are deducted, loan status automatically changes to "Closed"

• No manual action required

2. Manual Closure (Early Repayment)

1. Go to Payroll → Loans & Advances

2. Click on the active loan

3. Click "Close Loan"

4. Enter closure details:

   • Closure date

   • Final settlement amount (if different from outstanding)

   • Remarks

5. Click "Confirm Closure"

Loan Reports

Available loan reports:

• Active Loans Report: All currently active loans with outstanding balances

• Loan History: Complete loan history for an employee

• EMI Schedule: Month-wise EMI deduction schedule

• Closed Loans: All fully repaid loans