The Loans Management component offers functions for mapping the complete loan process for loans given and loans taken, from entering data on a potential contract right through to contract disbursement and the data transfer to Financial Accounting. It incorporates complex collateral management functions, support for decision-making and a range of options for tailoring your contracts.

All the main forms of loan can be represented. The module supports all common loan forms thanks to the high degree of flexibility offered for setting up conditions, flows, collateral and loan partners. Besides traditional loan forms, the system also supports borrower's note loans, a special form of loan common on the German market.

Loans Management is fully integrated in SAP Treasury, allowing you to measure the effects of loan activities on your liquidity or interest rate risk directly. Cross-application functions, such as SAP Business Partner Management or the Information System provide you with a comprehensive overview of the business relationships maintained with your loan partner.

The following product categories are available in the system for representing the various loan forms:

• Mortgage loans
• Borrower's note loans
• Policy loans
• General loan (for managing any other loans)

Depending on your company’s requirements, you can subdivide your loan transactions into product types, which you can use to define specific forms of loan or business areas. You define the product types in Customizing for Loans according to your individual requirements and assign each product type to a product category and condition group. These settings apply across all company codes.

You can enter rudimentary data from prospective customers or actual inquiries for specific contract conditions. The flexible condition structure allows you represent complex interest and repayment terms. The task of drawing up standard contracts is supported with predefined condition tables and reference loans. Once you have calculated the credit standing, assigned collateral and objects, and, where appropriate, calculated the collateral value, you can add any missing information before you conclude the contract. You can then disburse the contract fully, or make a number of partial disbursements. Additional process security can be incorporated by linking release requirements to the process steps. A filed documents facility is available for managing all the documents relating to a loan. For processing purchases and sales of traded borrower's notes, there is a special order processing function.

Position management offers functions for processing existing contracts, such as contract changes, business operations (such as charges, payoffs or borrower changes) or automatic generation of rollover offers.

The accounting processes for loans are supported within Loans Management. There are manual and automatic functions for generating debit items, and functions for transfer postings and position valuation. In addition to keeping the subledger, the component offers open item management. The relevant posting information is transferred to Financial Accounting via an interface. Payments the system is unable to assign to an appropriate customer account are posted to rejection accounts, while advance payments and overpayments are posted to a customer account. You can then process these payments manually using the payment postprocessing function.

The information system allows you to monitor deadlines and evaluate positions and revenues. The business partner information gives you detailed overview of your loan partner's total commitment. You can use the drilldown reporting tool to make use of predefined standard reports and to generate and edit your own reports.

Contract conditions form the basis for the contractual relationship. The conditions are used to generate planned records, which are required for processing loan receivables and payables later on.

Loans Management uses the status concept to reflect the various stages of the contract process (prospective customer through to conclusion of a contract).

In the loans area SAP Business Partner Management offers functions for assigning business partners to loans in specific roles (for example, main borrower or lender, guarantor, issuer), in this way one business partner can have more than one role.

Furthermore, you can enter details for important real estate objects and other collateral in the system, including guarantees, pledged securities and encumbrances.

The following diagram summarizes the relationships in Loans Management, taking mortgage loan business as an example: