Loan Documentation Procedure

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Loan Documents Checklist

• • Loan Application CI/BI Report • Co Signer’s Profile • Loan Recommendation Sheet • Promissory Note • Discount Statement • • Loan Amortization Schedule Deed of Assignment of Deposit • Security Agreement/Kasabutan • Credit Memo for Savings Account or Cashier’s Check • Signature Cards for Opening of Savings Account 2

Loan Application

• Basis for determining whether the applicant meets the basic eligibility criteria of the ABC Loan • Given to the client after the client orientation session and submitted to the AO after completion • AO should assist Clients who need help in completing the application if required.

• Should be properly filled out • Signed by borrower and the co-borrower • Can be handwritten. But if handwriting is not legible, should be typewritten • With client’s picture ID and any other requirements 3

Credit Investigation Report

• Basis for determining the client’s character and capacity to pay • Contains information about the client’s personal circumstances, assets, credit history, savings, details of his/her business, cash flow analysis, results of character checking, and the AO’s own assessment and recommendations on the loan application • Prepared and signed by the AO • Reviewed by the MFU Supervisor • AO is responsible for verifying all information supplied in the CI report. Any false information deliberately supplied by the AO will be a cause for disciplinary action. • Can be handwritten 4

Co Maker’s Profile

• Prepared by the AO by interviewing the co-signer • Signed by the co-signer after the interview • Used to determine the eligibility of the person as co-signer • Contains information about the co-signer’s personal circumstances, details of his/her occupation and income, relationship to the client, and his/her willingness to act as co-signer.

• Before the interview, AO should clearly explain to the person the responsibilities of a co-signer and the strict policy of the bank with regard to loan collection • Can be handwritten 5

Loan Recommendation Sheet

• Prepared by the AO • Submitted to the Credit Committee along with the loan application and CI report • Contains the highlights of the CI report • Indicates the decision taken by the Credit Committee with regards to the loan application • Can be handwritten 6

Promissory Note

• Serves as the main loan document or evidence that the client has taken out a loan from the bank and agrees to the terms and conditions of the loan • Indicates the date of PN, name of borrower, amount of loan, maturity date, interest rate and penalty charges, and other conditions of the loan • Loan amortization schedule is attached to the PN • Signed by the borrower(s), co-signer(s) at the bank immediately before loan release • Also signed by the AO and MFU Supervisor as witnesses • Prepare required number of copies (2 ) • Should be checked by the MFU Supervisor to make sure that the completed PN is in order • Should be typewritten 7

Disclosure Statement

• Shows amount of financial and non-financial charges to be deducted from the loan, and the net proceeds of the loan • Also proves that the net proceeds have been received by the borrower • Prepared necessary copies – the original copy of which is given to the borrower and copy/ies kept for file • Checked by the bank accountant • Signed by the borrower immediately after the proceeds of the loan are disbursed (through deposit or CC) • Should be typewritten 8

Security Agreement

• Provides additional guarantee (aside from co-signer’s guarantee) for the loan from the borrower • Indicates the type of assets owned and offered by the borrower to secure his/her loan, and the borrower’s consent to turn these assets over and allow them to be sold by the bank if s/he fails to comply with his/her obligation • Prepared by the AO • Signed by the borrower and spouse before loan disbursement • Also signed by the AO and MFU supervisor as witnesses • Can be handwritten 9

Any Question?