Managers and owners · Lesson 8 of 15

Design loan products

Build the Biashara Loan product step by step (interest, limits, a processing fee, a late-payment penalty and requirements), then test it on a sample loan without saving anything.

About 20 minutes

Key ideas

1

Reducing balance, not Flat

Every loan starts from a product. Under Interest you set the Interest rate (%) and the Interest period; if you pick Flat, Adili warns you that Flat interest does not meet the reducing-balance rule. The Bank of Tanzania requires Reducing balance, where interest is charged only on what's still owed.

2

Limits officers can't cross

Term and amount limits set the minimum, default and maximum term and amount, and Repayment sets how often the borrower pays. Biashara Loan allows 3 to 12 months (6 by default) and 200,000 to 5,000,000 shillings, repaid Monthly, and officers can't lend outside these limits.

3

Fees and late payment

Add fee or add-on sets each charge: its Calculation, how often it's Billed, and whether it's Taken off the amount paid out. Biashara Loan's Processing fee is 2%, charged Once and taken off the payout, because borrowers must be told the full cost. The Late payment policy then charges 5% of the overdue amount after a 3-day grace period.

4

Requirements, Terms and a test run

Ticking Guarantor required and National ID (NIDA) under Required documents means no loan is submitted without them. After Save product, every new loan copies the product's Terms. Test it under Loans → New Loan: the Schedule preview shows equal instalments with interest falling each month, and nothing is saved until you create the loan.

Practice

Try it in your training organization

  1. 1. Open Loan Products, choose + and enter a Product name, a Product code and the currency TZS, for example Biashara Loan with code BL01.
  2. 2. Under Interest, type an Interest rate (%) such as 3, pick Flat to see the warning, then choose Reducing balance and Per month in Interest period.
  3. 3. Set the minimum, default and maximum term (3, 6 and 12 months), the amounts (200,000 and 5,000,000) and the Repayment frequency Monthly.
  4. 4. Choose Add fee or add-on: Name Processing fee, Calculation Percentage, value 2, Type Fee, Billed Once, tick On every loan, and in Collected choose Taken off the amount paid out.
  5. 5. Under Late payment policy set Penalty type Percentage of overdue, Penalty value 5 and Grace period (days) 3; tick Guarantor required and National ID (NIDA) under Required documents, keep Product is active ticked, and choose Save product.
  6. 6. Open Loans → New Loan, pick a borrower and your product, enter 1,000,000 over 6 months, read the Schedule preview, and leave without creating the loan.

Check yourself

Watch the video and take the quiz

Sign in to watch this lesson's video, answer its 4 questions and count it towards your certificate. Your progress is saved.

Open in my learning