Skip to main content

​
Overview

Creating a loan in Agatabo is a structured 5-step process that captures borrower information, loan terms, interest rules, securities, and bank details. Agatabo automatically calculates the installment schedule and disburses funds when the loan is created. Use this when: A member applies for a loan and you need to formalize the loan agreement with specific terms.

​
Before You Begin

Prerequisites:
  • You have loans:write permission
  • The borrower exists as an organization user with a member role
  • You know the loan amount, term, and interest rate
  • You understand which interest calculation type and installment structure to use
  • Organization has sufficient cash to disburse the loan
Important: Most loan terms (interest rate, calculation type, installment type, payment allocation) cannot be changed after creation. You can increase principal and extend period via loan modification, modify individual installments, apply penalties, or record payments. Plan carefully before creating the loan.

​
The 5-Step Loan Creation Process

​
Overview of Steps

StepWhat You’ll DoTime Required
1. Basic InformationSelect borrower, enter amount, period, and start date2 minutes
2. Loan RulesConfigure interest, installment type, payment allocation, and fees3-5 minutes
3. SecuritiesAdd guarantors, collateral, or savings lien2-3 minutes
4. Bank DetailsSelect bank account and enter bank charges (if any)1 minute
5. Review & SubmitReview all details and create the loan1-2 minutes
Let’s walk through each step in detail.

​
Step 1: Basic Information

1

Open Loans section

Click Loans in the left sidebar
2

Start loan creation

Click “Create Loan” button
3

Step 1 opens

The loan creation wizard displays the Basic Information form

​
Enter Basic Loan Details

FieldDescriptionRequiredExample
Organization UserMember receiving the loanYesJohn Mugisha
Principal AmountLoan amount to disburseYes500,000 RWF
PeriodLoan period in monthsYes12
Start DateDate loan starts (funds released)Yes2026-06-08
PurposeReason for the loanNoSmall business capital
First payment date: Agatabo automatically calculates the first payment date as one month after the start date. For a loan starting on 2026-06-08, the first payment will be due on 2026-07-08.

​
Example: Basic Information for a Business Loan

Organization User: Jane Uwase
Principal Amount: 1,000,000 RWF
Period: 24 months
Start Date: 2026-06-08
Purpose: Inventory purchase for retail shop

​
Understanding Loan Period

Loan period = duration in months.
  • 12 months = 12 monthly payments
  • 24 months = 24 monthly payments
  • 6 months = 6 monthly payments
Agatabo generates monthly installments automatically based on the period.
1

Complete all required fields

Fill in organization user, principal amount, period, and start date
2

Click 'Next'

Proceeds to Step 2: Loan Rules

​
Step 2: Loan Rules (Most Important)

This step defines how interest is calculated and how payments are structured. Understanding these options is critical to creating the right loan type.
These settings cannot be changed after the loan is created. Take time to select the correct options. If you’re unsure, consult Loan Rules Explained for detailed examples.

​
Interest Configuration

FieldDescriptionOptionsExample
Interest RatePercentage rate chargedAny positive number5
Interest Rate TypeHow the rate is interpretedMONTHLY, YEARLYMONTHLY
Interest Calculation TypeHow interest is computedSIMPLE, COMPOUND, REDUCING_BALANCEREDUCING_BALANCE
Interest Payment TimingWhen interest is paidIN_ADVANCE, WITH_INSTALLMENTSWITH_INSTALLMENTS

​
Interest Rate Type

  • MONTHLY: Rate applies each month (5% monthly = 5% × 12 = 60% annual effective)
  • YEARLY: Annual rate divided across installments (12% yearly = 1% per month)
Common practice: Most tontines use MONTHLY rates for simplicity. Members understand “5% per month” more easily than annual percentage rates.

​
Interest Calculation Type

Interest calculated on original principal only, doesn’t compound.Formula: Total Interest = Principal × Rate × TermExample: 100,000 RWF at 5% monthly for 12 months
  • Interest = 100,000 × 0.05 × 12 = 60,000 RWF
  • Total repayment = 160,000 RWF
Best for: Short-term loans, small amounts, simple member understanding
See detailed examples with tables →

​
Interest Payment Timing

  • IN_ADVANCE: Interest deducted upfront (from savings or disbursement)
    • Example: 100,000 RWF loan with 12,000 RWF interest → interest paid from member’s savings before disbursement
    • Installments repay principal only
    • Common in microfinance
  • WITH_INSTALLMENTS (default): Interest included in each payment
    • Example: 100,000 RWF loan → member receives full 100,000 RWF
    • Each installment includes principal + interest
    • Standard commercial loan structure

​
Installment Configuration

FieldDescriptionOptionsExample
Installment TypeHow payments are structuredEQUAL_PRINCIPAL, EQUAL_TOTALEQUAL_TOTAL
Payment Allocation OrderHow payments are splitINTEREST_FIRST, PRINCIPAL_FIRST, PROPORTIONALINTEREST_FIRST

​
Installment Type

Each payment has the same principal amount, but interest decreases over time.Example: 120,000 RWF loan for 12 months at 5% reducing balance
  • Principal per payment: 120,000 ÷ 12 = 10,000 RWF
  • Month 1: 10,000 principal + 6,000 interest = 16,000 total
  • Month 2: 10,000 principal + 5,500 interest = 15,500 total
  • Month 12: 10,000 principal + 500 interest = 10,500 total
Payment pattern: Starts high, decreases each monthBest for: Members who want declining payment amounts

​
Payment Allocation Order

When a member makes a payment, how should it be split between principal and interest?
  • INTEREST_FIRST: Pay interest fully, then principal
    • Most common, ensures interest revenue is collected
    • Example: 10,000 RWF payment with 3,000 interest due → 3,000 to interest, 7,000 to principal
  • PRINCIPAL_FIRST: Pay principal fully, then interest
    • Reduces outstanding balance faster
    • Example: 10,000 RWF payment with 7,000 principal due → 7,000 to principal, 3,000 to interest
  • PROPORTIONAL: Split payment based on the ratio of principal to interest
    • Fair allocation for partial payments
    • Example: 10,000 RWF payment with 7,000 principal + 3,000 interest due → 7,000 to principal, 3,000 to interest (70/30 split)
Recommended for most loans: Use REDUCING_BALANCE interest calculation with EQUAL_TOTAL installments and INTEREST_FIRST payment allocation. This creates standard amortized loans that members understand.

​
Disbursement Fees (Optional)

Configure if your organization charges a loan disbursement fee:
FieldDescriptionOptions
Disbursement Fee TypeHow the fee is calculatedPERCENTAGE, FIXED_AMOUNT
Fee Amount/PercentageFee value2% or 5,000 RWF
Deduct from SavingsWhere fee is deducted fromChecked/Unchecked
Fee Deduction Options:
  • Deduct from cash: Fee deducted from loan disbursement amount (member receives less cash)
  • Deduct from savings: Fee deducted from member’s savings balance (full disbursement amount released)
1

Configure all loan rules

Select interest calculation, installment type, payment allocation, and disbursement fees
2

Click 'Next'

Proceeds to Step 3: Securities

​
Step 3: Securities

Securities protect the organization in case of default. Add one or more securities to meet the coverage requirement (total security value must cover the loan amount minus any deductions).

​
Types of Securities

Personal guarantees from other organization users.
  • Select one or more guarantors from the member list
  • Guarantors commit to repaying if borrower defaults
  • Typically family members, friends, or business partners
Example: Jane Uwase guarantees 100% of John Mugisha’s 500,000 RWF loan

​
Adding Securities

1

Select security type

Choose Guarantor, Collateral, or Savings
2

Enter details

  • Guarantor: Select organization user and enter guaranteed amount
  • Collateral: Enter description, value, and upload documents
  • Savings: Enter amount of borrower’s savings to pledge
3

Add multiple securities

Click “Add Security” to add more
4

Verify coverage

Ensure total security value meets requirement
5

Click 'Next'

Proceeds to Step 4: Bank Details
Securities are informational in Agatabo - they document the agreement but don’t automatically enforce collection. Your organization’s policies determine how securities are used in case of default.

​
Step 4: Bank Details

Select which bank account will disburse the loan and enter any bank charges:
FieldDescriptionRequired
Bank AccountAccount from which funds will be disbursedYes
Bank Charge AmountTransaction fees charged by the bank (if any)No
Bank charges: If your bank charges a fee for the transfer (e.g., mobile money fees, wire transfer fees), enter that amount here. It will be recorded as a bank charge expense.
Total bank outflow = Loan amount - Disbursement fee (if deducted from cash) + Bank charge
1

Select bank account

Choose the account that will release the funds
2

Enter bank charges

If applicable, enter the transaction fee amount
3

Click 'Next'

Proceeds to Step 5: Review & Submit

​
Step 5: Review & Submit

The final step displays a comprehensive summary of the loan for your review.

​
What’s Displayed

The review page shows:
  • Borrower details: Name, email, account number, current savings balance
  • Loan terms: Principal, period, start date, purpose
  • Interest configuration: Rate, calculation type, installment type, payment allocation
  • Disbursement fees: Fee type and amount (if configured)
  • Securities: All added guarantors, collateral, and savings liens
  • Bank details: Selected account and bank charges
  • Calculated totals:
    • Total interest
    • Total repayment amount
    • Amount member will receive (after fees)
1

Review all details carefully

This is your last chance to catch errors - most settings cannot be changed after creation
2

Go back if needed

Use the back button to return to previous steps and make corrections
3

Click 'Submit Loan Application'

Creates the loan and disburses funds automatically

​
What Happens Next

When you create the loan, Agatabo automatically:
  1. Generates installment schedule: Calculates all monthly payment amounts and due dates
  2. Creates journal entries:
    • Dr LOAN_RECEIVABLE: Principal amount (asset)
    • Dr INTEREST_RECEIVABLE: Total interest (if paid with installments)
    • Cr CASH: Principal amount minus fees (if deducted from cash)
    • Cr INTEREST_INCOME: Total interest recognized
    • Cr DISBURSEMENT_FEE_INCOME: Fee amount (if charged)
    • Dr BANK_CHARGE_EXPENSE / Cr CASH: Bank charges (if applicable)
  3. Deducts from savings (if configured):
    • Disbursement fee (if “deduct from savings” enabled)
    • Advance interest (if interest paid IN_ADVANCE)
  4. Creates member’s loan ledger account: Tracks the outstanding balance
  5. Records in audit trail: Logs all loan details with timestamp and user
  6. Sends notification (if enabled): Borrower receives loan confirmation
  7. Updates analytics: Dashboard shows updated Portfolio Outstanding

​
Viewing the Created Loan

1

Navigate to Loans

Loans section shows all active loans
2

Find the loan

Search by borrower name or loan ID
3

View details

Click the loan to see installment schedule, payment history, and balance
Learn how to view loan details →

​
Common Scenarios

​
Creating a Loan Larger Than Member’s Savings

Some tontines have rules like “maximum loan = 3× member’s savings balance.”
Loan eligibility validation:
  • Agatabo enforces the max loan percentage rule (if configured in Settings → Rates)
  • If you try to create a loan exceeding the maximum, you’ll get an error
  • Check member’s current savings balance in Organization Users → User Details
  • Example: If max loan = 3× savings and member has 100,000 saved, maximum loan is 300,000

​
Creating a Loan with Irregular Payment Schedule

If the member needs to skip certain months or has a custom schedule:
  1. Create the loan with standard monthly installments
  2. After creation, modify individual installment due dates or amounts
  3. Navigate to the loan details page and adjust the schedule
Learn about modifying loans →

​
Creating a Grace Period Loan

If the member should not pay for the first N months:
  1. Create the loan normally (first payment will be 1 month after start date)
  2. After creation, modify the first N installments by pushing their due dates forward
  3. Example: For 3-month grace, move installments 1-3 to months 4-6
  4. Interest will still accrue during grace period (depending on calculation type)

​
Common Issues

Cause: Organization doesn’t have enough cash to release the loan amount.Solution:
  • Check Bank Accounts for current cash balance
  • Ensure recent deposits have been recorded
  • Verify no pending disbursements that haven’t cleared
  • Consider reducing the loan amount
Cause: The organization user doesn’t have member role or doesn’t meet lending criteria.Solution:
  • Verify the user has been assigned a member role in Organization Users
  • Check if the member has any delinquent loans (some orgs block new loans until existing loans are current)
  • Consult lending policy requirements
Cause: Incorrect loan rules (interest type, calculation method, or installment structure).Solution:
  • Before creating: Go back to Step 2 and review all settings
  • After creating: Loans cannot be deleted, only modified. Contact accountant for guidance.
  • Consult Loan Rules Explained for expected outcomes
Cause: Disbursement date falls in a closed accounting period.Solution:
  • Use today’s date or a date in the current open period
  • If backdating is absolutely necessary, contact your accountant about period reopening (not recommended)
Learn about period closing →

​
Best Practices

Loan creation tips:
  • Use REDUCING_BALANCE with EQUAL_TOTAL for standard commercial-style loans
  • Use INTEREST_FIRST allocation to ensure interest revenue is prioritized
  • Set First Payment Date exactly one month after disbursement for monthly loans
  • Always add at least one security (guarantor or collateral) for loans over a threshold
  • Document unusual terms or special agreements in the Notes field
  • Print or export the installment schedule to give to the borrower
  • Verify member’s phone number and email for automatic payment reminders
After creating a loan, you may need to:

Record Loan Payments

Track member repayments and update balances

View Loan Details

Review installment schedule and payment history

Apply Penalties

Charge late fees for overdue payments

Loan Analytics

Monitor portfolio health and arrears

​
Need Help?

Loan Rules Explained

Detailed examples of interest calculations and installment types

Understanding Loan Terms

Definitions of all loan-related terminology

Loan Disbursement Workflow

Complete checklist for loan processing

Common Errors

Troubleshooting guide for loan creation issues