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Securities protect the organization against loan losses by ensuring recoverable assets or personal guarantees stand behind every loan. When you add a security to a loan, Agatabo immediately blocks the pledged amount — preventing it from being withdrawn, reused, or double-pledged — and automatically enforces recovery if the borrower defaults. When the loan is fully repaid, securities are released automatically with no manual action required.

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Security Types

A guarantor is another organization member who pledges a specific amount from their own savings to back the loan. If the borrower defaults and no collateral is present, Agatabo automatically debits the guarantor’s savings account for their pledged amount.How it works:
  • The guarantor’s pledged amount is blocked immediately upon loan creation.
  • The guarantor can still view their full savings balance but cannot withdraw the blocked portion.
  • The blocked amount cannot be used to guarantee other loans until this loan is repaid or defaulted.
  • Multiple guarantors are allowed on a single loan — their pledged amounts are pooled toward the coverage requirement.
Requirements:
  • The guarantor must be an active organization user with a savings account.
  • Their available savings (total savings minus amounts already blocked on other loans) must be at least as large as the pledged amount.
Example: Marie pledges 200,000 RWF to guarantee half of Jean’s 400,000 RWF loan. Marie’s available savings drop from 800,000 RWF to 600,000 RWF immediately. If Jean defaults, 200,000 RWF is automatically deducted from Marie’s savings.

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How Security Blocking Works

When you add a security during loan creation, Agatabo blocks the pledged amount by tracking it as a commitment against the relevant savings account. The available balance is calculated dynamically: Formula: Available Savings = Total Savings − Blocked Security Amounts Blocked amounts are only counted for active loans. When a loan is completed or defaulted, its associated securities are automatically released and the available balance increases accordingly.

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Example: Multiple Guarantees

Jane's total savings:          800,000 RWF

Active loans she is guaranteeing:
  Loan A (active):             200,000 RWF blocked
  Loan B (active):             150,000 RWF blocked

Total blocked:                 350,000 RWF
Jane's available savings:      450,000 RWF

Can Jane guarantee 500,000 RWF on a new loan?  ❌ No — only 450,000 available
Can Jane withdraw 500,000 RWF?                  ❌ No — same limit applies

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Viewing Security Capacities

Navigate to Loans → Security Capacities to see every member’s current availability for pledging. The table shows total savings, currently blocked amounts, and available capacity. Use this view before loan committee meetings to quickly verify that proposed guarantors have sufficient free capacity.

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Coverage Ratio

The coverage ratio is an organization-wide setting that defines the minimum security required relative to the loan principal. Default: 100% — total security value must equal or exceed the principal. Formula: Required Security ≥ Loan Principal × Coverage Ratio With a 100% coverage ratio, a 500,000 RWF loan requires at least 500,000 RWF in total security value from any combination of the three types. Valid combinations for a 500,000 RWF loan at 100% coverage:
Security CombinationTotal ValueValid?
One guarantor: 500,000 RWF500,000✅
Collateral valued at 500,000 RWF500,000✅
Savings lien: 300,000 + guarantor: 200,000500,000✅
Two guarantors: 250,000 each500,000✅
One guarantor: 400,000 only400,000❌ Insufficient
Adjust the coverage ratio in Settings → Loan Settings → Coverage Ratio.

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Adding Securities During Loan Creation

Securities can only be added during the loan creation wizard (Step 3). You cannot add or modify securities after a loan has been submitted.
1

Complete Steps 1 and 2 of the loan wizard

Finish the Basic Information and Loan Rules forms, then proceed to Step 3: Securities.
2

Click Add Security

Choose the security type: Guarantor, Collateral, or Savings Lien.
3

Fill in the details

  • Guarantor: Select the organization user and enter the pledged amount.
  • Collateral: Enter description, estimated value, and optionally upload ownership documents.
  • Savings Lien: Enter the amount of the borrower’s savings to block.
4

Add additional securities if needed

Click Add Another Security to attach more securities until the total coverage meets the requirement.
5

Proceed to Step 4

The system validates coverage before allowing you to continue. If validation fails, increase the pledged amounts or add another security.

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Validation at Creation

The system checks the following before you can proceed:
  • Guarantor: Does the guarantor exist and have a savings account? Does their available savings (after subtracting other commitments) meet the pledged amount?
  • Savings Lien: Does the borrower have sufficient savings after accounting for any disbursement fees and advance interest that will be deducted at disbursement?
  • Overall: Does the total security value meet the configured coverage ratio?

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Automatic Enforcement During Default

When you click Default Loan, Agatabo enforces recovery automatically in a fixed hierarchy. There is no manual “invoke guarantor” or “seize savings” step. Recovery hierarchy:
  1. Borrower’s savings — Up to the pledged savings lien amount (or the full available balance if no specific lien was set).
  2. Collateral — If any collateral security exists, the system records collateral recovery as pending (the pledged value is noted as recovered) and stops here. Guarantors are not charged when collateral is present.
  3. Guarantors’ savings — Only if there is no collateral. Each guarantor’s savings is debited up to their pledged amount, limited to their actual available balance.
  4. Bad debt write-off — Any outstanding balance not covered by recovered securities is posted as bad debt expense.

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Full Recovery Example

Loan outstanding:               600,000 RWF (500,000 principal + 100,000 interest)

Securities:
  Borrower's savings lien:      150,000 RWF
  Guarantor A pledged:          200,000 RWF (available: 200,000)
  Guarantor B pledged:          200,000 RWF (available: 250,000)

Recovery on default:
  Step 1 — Borrower savings:    150,000 RWF recovered
  Step 3 — Guarantor A:         200,000 RWF recovered
  Step 3 — Guarantor B:         200,000 RWF recovered (capped at pledge, not full available)
  Total recovered:              550,000 RWF
  Written off as bad debt:       50,000 RWF

Result: Journal entry created, loan status → DEFAULTED, securities released.

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Automatic Release of Securities

When a loan is no longer active — whether fully repaid or defaulted — all associated securities are automatically released. The blocked amounts are removed from the relevant savings accounts with no manual action required. On completion: The loan status changes to COMPLETED and Agatabo excludes its securities from the blocked-amount calculation. All guarantors’ and the borrower’s available savings increase immediately. On default: Recovery amounts are deducted first, then the loan is marked DEFAULTED and remaining security blocks are lifted.

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Release Example

Jane guarantees Loan A (300,000 RWF) and Loan B (200,000 RWF).
Jane's blocked amount:  500,000 RWF
Jane's available:       300,000 RWF (of 800,000 total)

Loan A is fully repaid → status changes to COMPLETED.

Jane's blocked amount:  200,000 RWF (only Loan B remains active)
Jane's available:       600,000 RWF (automatically updated)

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Viewing Securities on a Loan

1

Open the loan detail page

Go to Loans and click the relevant loan row.
2

Scroll to the Securities section

The section lists every security attached to the loan, including type, pledged amount, and guarantor or collateral details.
3

Review the coverage summary

A summary at the bottom shows the total security value and its percentage of the outstanding principal — color-coded green (sufficient) or red (below requirement).
Best practice: require securities totaling at least 100% of principal on all loans, verify guarantor capacity before the committee approval meeting, and document collateral with photos and ownership proof. Use the Security Capacities report to prevent any single member from over-pledging their savings across multiple loans.