[{"data":1,"prerenderedAt":502},["ShallowReactive",2],{"document-loan-policy-D13274":3},{"document":4,"label":23,"preview":11,"thumb":24,"thumb600":25,"description":5,"descriptionCustom":6,"apiDescription":5,"pages":8,"extension":10,"parents":26,"breadcrumb":30,"related":36,"customDescModule":177,"customdescription":6,"mdFm":178,"mdProseHtml":501},{"description":5,"descriptionCustom":6,"label":7,"pages":8,"size":9,"extension":10,"preview":11,"thumb":12,"svgFrame":13,"seoMetadata":14,"parents":16,"keywords":15},"LOAN POLICY The officers of [NAME OF BANK] (the \"Bank\"), in making loans and in their direction of other Bank personnel engaged in the preparation, administration, and safekeeping of loan documents, shall be guided by this Policy. OBJECTIVE OF THE BANK The management of the Bank believes that sound loans represent a desirable and profitable means of employing the Bank's funds. All such loans and extensions of credit shall be consistent with sound and prudent banking practices and in full conformity with applicable laws, regulations, rulings, and interpretations thereof, and shall be made without regard to race, sex, and national origin. Authorized Bank employees are expected to make all such loans permitted by the resources of the Bank. OBJECTIVE OF THIS POLICY The objectives of this Policy are as below: To create a set of standardized policies and procedures for the lending activities of the Bank. To institute due diligence for mitigating level of credit risk and improve credit quality. To define overall risk appetite. To establish underwriting framework - including maximum credit limits, risk limits, etc. To ensure thorough loan appraisal and proper monitoring of all outstanding loans. This includes both supervision of outstanding loans as well as recovery of overdue loans. This Loan Policy provides an overall description of all stages of the lending process. In pursuing its business, the Bank will operate according to the highest ethical and compliance standards and constantly seek to follow best practices in the industry. Under no circumstances will contravention of laws and relevant regulations be tolerated. PURPOSE OF LOAN In the near term, the Bank lending business will support the following use cases: [SPECIFY THE PURPOSE(S) FOR WHICH THE LOAN MAY BE GIVEN]. In the long term, it is envisaged that the lending business will reach out to both existing customers as well as open market customers and fulfill their financing needs for purposes as wide ranging as loans for purchasing consumer durables, cash loans, etc. The Bank can further extend loans to corporate (non-individual entities) for their business needs within the risk appetite and regulatory framework. ELIGIBILITY In case of individuals, loans shall be provided to: Salaried employees of public sector institutions/companies/undertakings Salaried employees of private sector companies Self-employed Individuals Students In case of business segments: The Bank aims to extend loans to the public for personal loans including consumer durables, travel, marriage and such. The Loan Policy enumerates the customer segments, purpose of loan, process of loan approval and disbursal, interest rate determination of the loan disbursal and charges to be borne by an individual customer. The Bank can further extend loans to anybody corporate(s), firm(s), or non-individual entities. SANCTIONING AUTHORITY The Investment and Lending Committee (herein after referred to as the \"Authority\" or the \"Committee\") shall be the sanctioning authority. The Authority may approve the proposal from any other sector on a case-by-case basis covering the entire spectrum of aspects, that is, the purposes, size, interest rate, term, repayment terms, and security required, and any other conditions will be as decided by the Committee. The sanctions accorded shall be placed before the Board in their ensuing meeting for the purpose of review and ratification. If the Committee decides that any particular loan or any other feature of a program needs to be placed before the Board, the same can be placed before the Board for seeking their approval as well. LOAN UNDERWRITING The process will start from the receipt of customer's request and the processing of same, including approval of the loan. The process ends with the communication of an approval of loan to the customer through a term sheet/sanction letter. Loan Application: The customer shall submit a form at either offline or online touch points to inform the Bank regarding the interest in a certain loan product Document Verification: The documents submitted by the customer will be required to be analyzed, either using competent technological or human resources. Credit Appraisal: This step involves arriving at a decision to provide the loan or not. The Bank shall require additional documents from the customer such as an income statement, or others considered necessary. The final decision to provide the loan or not will remain with the Bank after all the previous steps have been taken. PRICING AND DETERMINATION OF RATE OF INTEREST In the existing scenario of dynamic interest rates, competition, and the need for the Bank to expand the direct finance portfolio with addition of quality assets, the need for a dynamic pricing strategy is essential. The pricing of loans is carried out as per the gradation of risk determined by the internal ratings for various customer segments. With a view to remaining competitive in the market, the existing practice of fixing the interest/discount rate depending upon competitiveness/demand, asset cover and such other factors, may continue. As regards assistance sanctioned for infrastructure projects and such other projects under a joint finance/consortium arrangement, the interest rate stipulated by the lead institution/other banks would normally be followed. In the case of projects involving multiple/joint/consortium financing, interest rate reset clauses would be in line with other banks/institutions. The base interest rate comprises the cost of funds, operational costs, and the minimum rate of return desired. The further spread will consider factors of the creditworthiness of the customer in the form of risk premium. Other relevant factors have been enumerated below: Interest shall be accrued and charged periodically but not less than monthly rests. Fees/charges may be levied upfront or at other specific intervals as per the agreed terms and conditions. Some fees or commissions may have to be paid before the commencement of the loan; the customer shall be required make advance payment of such funds to the Bank. In all cases, the effective interest rate shall be clearly communicated to the customer, and all fees, commissions, interest rates and their calculations shall be transparent and explained in a manner that could be understood by the customer, and the duplicate term sheet duly signed shall be obtained from the borrower in token of acceptance of the terms and conditions of the loan. The Interest Rate Policy will be reviewed periodically to consider market forces, inflation and risk factors.",null,"Loan Policy","6",513,"doc","https://templates.business-in-a-box.com/imgs/1000px/loan-policy-D13274.png","https://templates.business-in-a-box.com/imgs/250px/13274.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#13274.xml",{"title":15,"description":6},"loan policy",[17,20],{"label":18,"url":19},"Legal Agreements","/templates/business-legal-agreements/",{"label":21,"url":22},"License Agreements","/templates/license-agreement/","Loan Policy Template","https://templates.business-in-a-box.com/imgs/400px/13274.png","https://templates.business-in-a-box.com/imgs/600px/13274.png",[27,17,20],{"label":28,"url":29},"Templates","/templates/",[31,32,33],{"label":28,"url":29},{"label":18,"url":19},{"label":34,"url":35},"Loans & Promissory Notes","/templates/loans-and-promissory-notes/",[37,41,45,49,53,57,61,65,69,73,77,81,85,103,120,133,152,164],{"label":38,"url":39,"thumb":40,"extension":10},"Credit Policy","/template/credit-policy-D12633","https://templates.business-in-a-box.com/imgs/250px/12633.png",{"label":42,"url":43,"thumb":44,"extension":10},"Credit Note","/template/credit-note-D13639","https://templates.business-in-a-box.com/imgs/250px/13639.png",{"label":46,"url":47,"thumb":48,"extension":10},"Promissory Note","/template/promissory-note-D434","https://templates.business-in-a-box.com/imgs/250px/434.png",{"label":50,"url":51,"thumb":52,"extension":10},"Promissory Note With Acknowledgment","/template/promissory-note-with-acknowledgment-D437","https://templates.business-in-a-box.com/imgs/250px/437.png",{"label":54,"url":55,"thumb":56,"extension":10},"Promissory Note Line of Credit","/template/promissory-note-line-of-credit-D435","https://templates.business-in-a-box.com/imgs/250px/435.png",{"label":58,"url":59,"thumb":60,"extension":10},"Collection Letter_Following Promissory Note","/template/collection-letter_following-promissory-note-D196","https://templates.business-in-a-box.com/imgs/250px/196.png",{"label":62,"url":63,"thumb":64,"extension":10},"Demand to Pay Promissory Note","/template/demand-to-pay-promissory-note-D207","https://templates.business-in-a-box.com/imgs/250px/207.png",{"label":66,"url":67,"thumb":68,"extension":10},"Letter of Default on Promissory Note","/template/letter-of-default-on-promissory-note-D431","https://templates.business-in-a-box.com/imgs/250px/431.png",{"label":70,"url":71,"thumb":72,"extension":10},"Movable Hypothec Promissory Note","/template/movable-hypothec-promissory-note-D432","https://templates.business-in-a-box.com/imgs/250px/432.png",{"label":74,"url":75,"thumb":76,"extension":10},"Promissory Note With Acceleration Clause","/template/promissory-note-with-acceleration-clause-D436","https://templates.business-in-a-box.com/imgs/250px/436.png",{"label":78,"url":79,"thumb":80,"extension":10},"Guarantee of Claim Promissory Note","/template/guarantee-of-claim-promissory-note-D884","https://templates.business-in-a-box.com/imgs/250px/884.png",{"label":82,"url":83,"thumb":84,"extension":10},"Security Agreement and Promissory Note","/template/security-agreement-and-promissory-note-D912","https://templates.business-in-a-box.com/imgs/250px/912.png",{"description":86,"descriptionCustom":6,"label":87,"pages":88,"size":9,"extension":10,"preview":89,"thumb":90,"svgFrame":91,"seoMetadata":92,"parents":94,"keywords":93,"url":102},"LOAN AGREEMENT This Loan Agreement (\"Agreement\") is made and effective the [DATE], BETWEEN: [LENDER NAME] (the \"Lender\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] (the \"Borrower\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] Promise to Pay Within [NUMBER] months from today, Borrower promises to pay to Lender the sum of [AMOUNT], and interest and other charges stated below. Responsibility Although this Agreement may be signed below by more than one person, Borrower understands that both parties are individuals responsible for paying back the full amount. Breakdown of Loan Amount of Loan: Other (Describe): Amount Financed: Finance Charge: Total of Payments: Annual Rate: Repayment Borrower will repay the amount of this note in [NUMBER] equal uninterrupted monthly installments of [AMOUNT] each on the [DAY] of each month starting on the [DATE], and ending on [DATE]. Prepayment Borrower has the right to prepay the whole outstanding amount at any time","Loan Agreement","2","https://templates.business-in-a-box.com/imgs/1000px/loan-agreement-D417.png","https://templates.business-in-a-box.com/imgs/250px/417.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#417.xml",{"title":93,"description":6},"loan agreement",[95,98,101],{"label":96,"url":97},"Finance & Accounting","finance-accounting",{"label":99,"url":100},"Business Loans","business-loan",{"label":99,"url":100},"/template/loan-agreement-D417",{"description":104,"descriptionCustom":6,"label":105,"pages":106,"size":9,"extension":10,"preview":107,"thumb":108,"svgFrame":109,"seoMetadata":110,"parents":112,"keywords":111,"url":119},"PAYMENT COLLECTIONS POLICY INTRODUCTION The Payment Collections Policy of [COMPANY NAME] outlines the procedures and guidelines for collecting payments from customers and clients. This Policy ensures efficient, consistent, and ethical practices in the collection of outstanding debts while maintaining positive customer relationships. PURPOSE The purpose of this Policy is to: Define the standard procedures for collecting payments from customers and clients. Ensure that collections are handled with professionalism, integrity, and respect for customers. Provide clear guidelines to employees involved in the payment collection process. COLLECTION PROCEDURES [COMPANY NAME] will implement the following procedures for payment collections: Billing and Invoicing: Invoices and billing statements will be sent to customers on agreed-upon terms. Payment due dates and methods will be clearly communicated on the documents. Reminder Notices: [COMPANY NAME] may issue reminder notices or follow-up communications to prompt customers to make timely payments. Late Payment Notices: If payments are not received by the due date, customers may receive late payment notices, outlining the overdue amount, penalties, and the urgency of payment. Collection Calls: In the event of continued non-payment, [COMPANY NAME] may make collection calls to customers to discuss outstanding balances and arrange for payment. Collection Letters: Formal collection letters may be sent to customers with severely delinquent accounts, outlining the consequences of non-payment and offering options for resolution. Negotiations and Payment Plans: [COMPANY NAME] may be open to negotiating payment plans with customers facing financial difficulties, provided it is feasible and agreed upon. Legal Action: As a last resort, [COMPANY NAME] may take legal action, such as hiring a collection agency or pursuing legal remedies, to recover outstanding debts. RESPONSIBILITIES The responsibilities for payment collections include: Finance Department: The Finance Department is responsible for issuing invoices, monitoring payment due dates, and coordinating the initial stages of the collections process. Collections Team: The collections team, if applicable, is responsible for the more assertive collection activities, including follow-up calls, collection letters, and negotiations. CUSTOMER RELATIONSHIPS Maintaining positive customer relationships is a core value of [COMPANY NAME]. This commitment extends to all interactions, including those that involve the collections process","Payment Collections Policy","3","https://templates.business-in-a-box.com/imgs/1000px/payment-collections-policy-D13744.png","https://templates.business-in-a-box.com/imgs/250px/13744.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#13744.xml",{"title":111,"description":6},"payment collections policy",[113,116],{"label":114,"url":115},"Human Resources","human-resources",{"label":117,"url":118},"Company Policies","company-policies","/template/payment-collections-policy-D13744",{"description":121,"descriptionCustom":6,"label":122,"pages":123,"size":9,"extension":10,"preview":124,"thumb":125,"svgFrame":126,"seoMetadata":127,"parents":129,"keywords":128,"url":132},"INVESTMENT POLICY STATEMENT INTRODUCTION The [COMPANY NAME] Fund (hereinafter referred to as the \"Fund\") was created to provide perpetual financial support to the [COMPANY NAME] (the \"Institution\" or \"Company\"). The purpose of this Investment Policy Statement is to establish guidelines for the Fund's investment portfolio (the \"Portfolio\"). The statement also incorporates accountability standards that will be used for monitoring the progress of the Portfolio's investment program and for evaluating the contributions of the manager(s) hired on behalf of the Fund and its beneficiaries. ROLE OF THE INVESTMENT COMMITTEE The Investment Committee (the \"Committee\") is acting in a fiduciary capacity with respect to the Portfolio and is accountable to the Board of the Company and to the Executive Committee, for overseeing the investment of all assets owned by, or held in trust for, the Portfolio. This Investment Policy Statement sets forth the investment objectives, distribution policies, and investment guidelines that govern the activities of the Committee and any other parties to whom the Committee has delegated investment management responsibility for Portfolio assets. The investment policies for the Fund contained herein have been formulated consistent with the Institution's anticipated financial needs and in consideration of the Institution's tolerance for assuming investment and financial risk, as reflected in the majority opinion of the Committee. Policies contained in this statement are intended to provide guidelines, where necessary, for ensuring that the Portfolio's investments are managed consistent with the short-term and long- term financial goals of the Fund. At the same time, they are intended to provide for sufficient investment flexibility in the face of changes in capital market conditions and in the financial circumstances of the Institution. The Committee will review this Investment Policy Statement at least once per year. Changes to this Investment Policy Statement can be made only by affirmation of a majority of the Committee, and written confirmation of the changes will be provided to all Committee members and to any other parties hired on behalf of the Portfolio as soon thereafter as is practical. INVESTMENT OBJECTIVE AND SPENDING POLICY The Fund is to be invested with the objective of preserving the long-term, real purchasing power of assets, while providing a relatively predictable and growing stream of annual distributions in support of the Institution. For making distributions, the Fund shall make use of a total-return-based spending policy, meaning that it will fund distributions from net investment income, net realized capital gains, and proceeds from the sale of investments. ASSET ALLOCATION POLICY The Committee recognizes that the strategic allocation of Portfolio assets across broadly defined financial asset and sub-asset categories with varying degrees of risk, return, and return correlation will be the most significant determinant of long-term investment returns and Portfolio asset value stability. The Committee expects that actual returns and return volatility may vary from expectations and return objectives across short periods of time. While the Committee wishes to retain flexibility with respect to making periodic changes to the Portfolio's asset allocation, it expects to do so only in the event of material changes to the Fund, to the assumptions underlying Fund spending policies, and/or to the capital markets and asset classes in which the Portfolio invests. Fund assets will be managed as a balanced portfolio composed of two major components: an equity portion and a fixed income portion. The expected role of equity investments will be to maximize the long-term real growth of Portfolio assets, while the role of fixed income investments will be to generate current income, provide for more stable periodic returns, and provide some protection against a prolonged decline in the market value of equity investments. Cash investments will, under normal circumstances, only be considered as temporary Portfolio holdings and will be used for Fund liquidity needs or to facilitate a planned program of dollar-cost averaging into investments in either or both equity and fixed income asset classes. Outlined below are the long-term strategic asset allocation guidelines determined by the Committee to be the most appropriate, given the Fund's long-term objectives and short-term constraints. Portfolio assets will, under normal circumstances, be allocated across broad asset and sub-asset classes in accordance with the following guidelines: Asset class Sub-asset class Target allocation Equity [#]% U.S. [#]% Non-U.S. [#]% Fixed income [#]% Investment grade [#]% Below-investment grade [#]% Cash [#]% ","Investment Policy Statement","4","https://templates.business-in-a-box.com/imgs/1000px/investment-policy-statement-D12883.png","https://templates.business-in-a-box.com/imgs/250px/12883.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12883.xml",{"title":128,"description":6},"investment policy statement",[130,131],{"label":114,"url":115},{"label":117,"url":118},"/template/investment-policy-statement-D12883",{"description":134,"descriptionCustom":6,"label":135,"pages":136,"size":9,"extension":137,"preview":138,"thumb":139,"svgFrame":140,"seoMetadata":141,"parents":143,"keywords":142,"url":151},"Your Company Name Account Statement\r  Your Company Address\r  Your Company City, State, Zip DATE\r  Phone: 123.456.7890\r  Fax: 123.456.7890\r  Email: someone@yourcompany.com\r  Customer Name\r  ATTN: Customer Contact\r  Customer Address\r  Customer City, State, Zip\r  Customer ID:\r  DATE INVOICE # AMOUNT PAYMENT BALANCE\r  CURRENT 1-30 DAYS PAST DUE\r  31-60 DAYS PAST \r DUE\r  61-90 DAYS PAST \r DUE\r  OVER 90 DAYS \r PAST DUE AMOUNT DUE\r  -                        -                        -                        -                        -                        -$                      \r BILL TO\r  DESCRIPTION","Accounts Receivable","1","xls","https://templates.business-in-a-box.com/imgs/1000px/accounts-receivable-D308.png","https://templates.business-in-a-box.com/imgs/250px/308.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#308.xml",{"title":142,"description":6},"accounts receivable",[144,145,148],{"label":96,"url":97},{"label":146,"url":147},"Business Accounting","business-accounting",{"label":149,"url":150},"Business Spreadsheets","business-spreadsheets","/template/accounts-receivable-D308",{"description":153,"descriptionCustom":6,"label":154,"pages":106,"size":9,"extension":10,"preview":155,"thumb":156,"svgFrame":157,"seoMetadata":158,"parents":160,"keywords":159,"url":163},"EXPENSE REIMBURSEMENT POLICY PURPOSE The purpose of this Expense Reimbursement Policy is to establish guidelines and procedures for the reimbursement of business-related expenses incurred by employees, contractors, and other authorized individuals acting on behalf of [COMPANY NAME]. This Policy ensures transparency, accuracy, and fairness in handling expense claims. SCOPE This Policy applies to all employees, contractors, and authorized individuals who incur business-related expenses on behalf of [COMPANY NAME]. POLICY STATEMENTS Expense Eligibility Business-Related Expenses: Expenses eligible for reimbursement are those incurred while conducting company business or in the performance of assigned duties. These may include, but are not limited to, travel, meals, accommodation, supplies, and other necessary expenses. Authorization: All expenses must be authorized in advance by a supervisor or manager, either verbally or through the company's expense approval process. Expense Submission Expense Reports: All expenses must be documented using the company's designated expense report template or system. Expenses should be submitted promptly after incurring them, with receipts and supporting documentation attached. Receipts: Receipts are required for all expenses, regardless of the amount. Receipts should include details such as the date, vendor, items or services purchased, and the total amount. Expense Approval Supervisor Approval: Expense reports must be reviewed and approved by the employee's immediate supervisor or manager. The approver should ensure that expenses are reasonable, necessary, and in line with company policies. Secondary Review: In some cases, expense reports may undergo a secondary review by the Finance Department or another designated department for compliance and accuracy. Expense Reimbursement","Expense Reimbursement Policy","https://templates.business-in-a-box.com/imgs/1000px/expense-reimbursement-policy-D13688.png","https://templates.business-in-a-box.com/imgs/250px/13688.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#13688.xml",{"title":159,"description":6},"expense reimbursement policy",[161,162],{"label":114,"url":115},{"label":117,"url":118},"/template/expense-reimbursement-policy-D13688",{"description":165,"descriptionCustom":6,"label":166,"pages":106,"size":9,"extension":10,"preview":167,"thumb":168,"svgFrame":169,"seoMetadata":170,"parents":172,"keywords":175,"url":176},"CONFLICT OF INTEREST POLICY FOR BOARD MEMBERS PURPOSE The purpose of this Conflict of Interest Policy at [YOUR ORGANIZATION NAME] is to provide clear guidelines to ensure that all decisions made by board members are in the best interest of the organization. The Policy aims to prevent situations where personal, financial, or other interests could potentially conflict with the duty of board members to serve the organization's objectives. SCOPE This Policy applies to all board members of [YOUR ORGANIZATION NAME] and governs any situations where personal interests could impact their decision-making. It includes all direct and indirect interests, including financial, business, or other material benefits that may be gained from board decisions. POLICY PRINCIPLES Duty of Loyalty: Board members must prioritize the interests of [YOUR ORGANIZATION NAME] above their personal or financial interests when making decisions on behalf of the organization. Disclosure: Any board member who has a personal, financial, or other conflict of interest in a matter under consideration must disclose it to the board. Recusal: Board members must recuse themselves from discussions and decisions where a conflict of interest is identified to prevent biased decision-making. Transparency: All conflicts of interest must be documented in the minutes of the meeting and made transparent to relevant stakeholders. IDENTIFYING CONFLICTS OF INTEREST Financial Interests: Board members must disclose any financial interests they or their family members have in organizations or entities that do business with [YOUR ORGANIZATION NAME]. Personal Relationships: Conflicts may arise from personal relationships with staff, vendors, or other board members that could influence a board member's judgment. Competing Organizations: Board members should disclose any involvement in competing organizations or other entities that could create a conflict with their duties to [YOUR ORGANIZATION NAME]. DISCLOSURE REQUIREMENTS Annual Disclosure: Board members are required to submit an annual disclosure form identifying any potential conflicts of interest they may have. Ongoing Disclosure: In addition to annual disclosures, board members must promptly disclose any new potential conflicts as they arise during the course of their term. MANAGING CONFLICTS OF INTEREST Conflict Review: Upon disclosure of a potential conflict, the board will review the situation and determine if a conflict of interest exists.","Conflict Of Interest Policy For Board Members","https://templates.business-in-a-box.com/imgs/1000px/conflict-of-interest-policy-for-board-members-D13933.png","https://templates.business-in-a-box.com/imgs/250px/13933.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#13933.xml",{"title":171,"description":6},"conflict of interest policy for board members",[173,174],{"label":114,"url":115},{"label":117,"url":118},"conflict interest policy for board members","/template/conflict-of-interest-policy-for-board-members-D13933",false,{"seo":179,"reviewer":191,"legal_disclaimer":177,"quick_facts":195,"at_a_glance":197,"personas":201,"variants":226,"glossary":251,"sections":285,"how_to_fill":336,"common_mistakes":377,"faqs":402,"industries":430,"comparisons":447,"diy_vs_pro":461,"educational_modules":474,"related_template_ids_curated":477,"schema":487,"classification":489},{"meta_title":180,"meta_description":181,"primary_keyword":182,"secondary_keywords":183},"Loan Policy Template (Free Word)","Free loan policy template covering approval authority, documentation, related-party lending, interest-rate floors, security, and write-off authority. Free Word and PDF download.","loan policy template",[184,185,186,187,188,189,190],"loan policy template word","lending policy template","organizational loan policy","employee loan policy template","loan approval policy","internal loan policy","loan write-off policy",{"name":192,"credential":193,"reviewed_date":194},"Bruno Goulet","CEO, Business in a Box","2026-05-02",{"difficulty":196,"legal_review_recommended":177,"signature_required":177},"advanced",{"what_it_is":198,"when_you_need_it":199,"whats_inside":200},"A Loan Policy is a formal governance document that defines the rules an organization follows when extending or receiving loans — covering who can authorize a loan, what documentation is required, how interest rates are set, how collateral is handled, and who holds write-off authority. This free Word download gives finance teams, boards, and credit committees a structured, editable starting point they can adapt to their organization and export as PDF for adoption.\n","Use it when establishing a credit function, formalizing employee lending programs, onboarding a new finance committee, or preparing for an audit or regulatory review that requires documented lending governance.\n","Purpose and scope, approval authority tiers, borrower eligibility criteria, documentation requirements, interest-rate floor and pricing methodology, security and collateral requirements, related-party lending rules, monitoring and reporting obligations, default procedures, and write-off authority.\n",[202,206,210,214,218,222],{"title":203,"use_case":204,"icon_asset_id":205},"CFOs and finance directors","Formalizing internal lending governance before an audit or board review","persona-cfo",{"title":207,"use_case":208,"icon_asset_id":209},"Credit union managers","Documenting member loan approval criteria and interest-rate methodology","persona-credit-union-manager",{"title":211,"use_case":212,"icon_asset_id":213},"Nonprofit executive directors","Establishing related-party lending controls to satisfy IRS Form 990 requirements","persona-nonprofit-exec",{"title":215,"use_case":216,"icon_asset_id":217},"Corporate board members","Approving a policy that delegates loan authority within defined dollar thresholds","persona-board-member",{"title":219,"use_case":220,"icon_asset_id":221},"HR and payroll managers","Governing employee salary advance and emergency loan programs","persona-hr-manager",{"title":223,"use_case":224,"icon_asset_id":225},"Small business owners","Documenting owner or shareholder loans to satisfy lender due-diligence requirements","persona-small-business-owner",[227,231,233,237,240,244,247],{"situation":228,"recommended_template":229,"slug":230},"Governing loans extended to employees or staff","Employee Loan Agreement","loan-agreement-D417",{"situation":232,"recommended_template":87,"slug":230},"Documenting a specific loan between two parties",{"situation":234,"recommended_template":235,"slug":236},"Setting terms for a shareholder or owner loan to the company","Shareholder Loan Agreement","shareholder-loan-agreement-D13239",{"situation":238,"recommended_template":38,"slug":239},"Establishing a revolving credit facility for internal business units","credit-policy-D12633",{"situation":241,"recommended_template":242,"slug":243},"Controlling how the organization extends credit to customers","Credit and Collections Policy","payment-collections-policy-D13744",{"situation":245,"recommended_template":46,"slug":246},"Documenting a promissory note for a specific loan obligation","promissory-note-D434",{"situation":248,"recommended_template":249,"slug":250},"Managing third-party vendor payment terms and advance arrangements","Vendor Payment Policy","vendor-management-policy-D12802",[252,255,258,261,264,267,270,273,276,279,282],{"term":253,"definition":254},"Approval Authority","The designated individual or committee empowered to authorize a loan up to a defined dollar threshold.",{"term":256,"definition":257},"Related-Party Lending","Any loan extended to or received from an officer, director, owner, or entity in which a key stakeholder has a financial interest.",{"term":259,"definition":260},"Interest-Rate Floor","The minimum interest rate the organization will charge on any loan, typically set at or above the Applicable Federal Rate to avoid imputed-interest tax consequences.",{"term":262,"definition":263},"Applicable Federal Rate (AFR)","The minimum interest rate published monthly by the IRS for intra-company or related-party loans; loans below this rate may trigger imputed income.",{"term":265,"definition":266},"Collateral","An asset pledged by the borrower to secure repayment of a loan, which the lender can claim if the borrower defaults.",{"term":268,"definition":269},"Write-Off Authority","The delegated power to remove an uncollectable loan from the organization's books, recognizing it as a loss.",{"term":271,"definition":272},"Default","Failure by the borrower to meet one or more conditions of the loan — typically a missed payment, breach of covenant, or insolvency event.",{"term":274,"definition":275},"Loan-to-Value Ratio (LTV)","The loan amount expressed as a percentage of the collateral's appraised value; lower LTV ratios represent lower lender risk.",{"term":277,"definition":278},"Covenant","A condition or restriction in a loan agreement that the borrower must satisfy during the life of the loan — financial covenants set minimum performance thresholds.",{"term":280,"definition":281},"Imputed Interest","Interest the IRS considers to have been charged on a below-market loan even if no interest was actually paid, creating a taxable event for one or both parties.",{"term":283,"definition":284},"Provision for Loan Losses","An accounting reserve set aside against the risk that some loans on the books will not be repaid in full.",[286,291,296,301,306,311,316,321,326,331],{"name":287,"plain_english":288,"sample_language":289,"common_mistake":290},"Purpose and scope","States why the policy exists, which entities and loan types it covers, and which transactions are explicitly excluded.","This Loan Policy governs all loans extended by or to [ORGANIZATION NAME], including employee loans, intercompany advances, and shareholder loans. It does not apply to trade credit extended to customers in the ordinary course of business.","Defining scope too narrowly and omitting intercompany advances — those transactions then operate without any governance framework, creating audit findings.",{"name":292,"plain_english":293,"sample_language":294,"common_mistake":295},"Approval authority tiers","Sets dollar thresholds that determine whether a loan requires manager, CFO, CEO, or board approval before funds are released.","Loans up to $[AMOUNT] may be approved by the [TITLE]. Loans between $[AMOUNT] and $[AMOUNT] require written approval of the CFO. Loans exceeding $[AMOUNT] require Board of Directors approval prior to disbursement.","Creating only one approval tier for all loan sizes, which means the board must approve a $500 employee advance — making the policy ignored in practice.",{"name":297,"plain_english":298,"sample_language":299,"common_mistake":300},"Borrower eligibility criteria","Defines who qualifies to borrow, minimum tenure or creditworthiness standards, and any category of borrower that is automatically ineligible.","Eligible borrowers include permanent employees with at least [X] months of continuous service and no outstanding disciplinary actions. Officers and directors are subject to the additional requirements in Section 6 (Related-Party Lending).","Omitting a disqualification clause for employees with active disciplinary proceedings, creating awkward situations when a loan request arrives mid-process.",{"name":302,"plain_english":303,"sample_language":304,"common_mistake":305},"Documentation requirements","Lists every document that must be on file before a loan is disbursed — signed agreement, promissory note, proof of purpose, and collateral records.","Prior to disbursement, the file must contain: (a) a signed Loan Agreement; (b) a Promissory Note executed by the borrower; (c) proof of [PURPOSE, e.g., medical emergency / education enrollment]; and (d) a copy of the approval authorization.","Requiring documentation after disbursement rather than before — by then there is no leverage to collect missing paperwork, and the file fails the next audit.",{"name":307,"plain_english":308,"sample_language":309,"common_mistake":310},"Interest-rate floor and pricing methodology","Sets the minimum interest rate for all loans, explains how the rate is calculated, and requires periodic review against the IRS Applicable Federal Rate.","The interest rate on all loans shall be no less than the short-term Applicable Federal Rate published by the IRS for the month of disbursement, updated quarterly. The CFO shall review and document the applicable AFR before each loan is issued.","Setting a fixed interest-rate floor that becomes outdated when the AFR rises, inadvertently creating below-market loans and triggering imputed-income tax consequences.",{"name":312,"plain_english":313,"sample_language":314,"common_mistake":315},"Security and collateral requirements","Specifies the loan sizes that require collateral, acceptable collateral types, minimum LTV ratios, and how collateral is valued and perfected.","Loans exceeding $[AMOUNT] require collateral with an appraised value of at least [X]% of the loan principal. Acceptable collateral includes [LIST, e.g., real property, vehicle titles, or listed securities]. A perfected security interest must be filed before disbursement.","Accepting collateral without perfecting the security interest — if the borrower defaults and other creditors appear, the organization may lose its claim entirely.",{"name":317,"plain_english":318,"sample_language":319,"common_mistake":320},"Related-party lending controls","Establishes heightened scrutiny, mandatory disclosure, and board-level approval for any loan to or from an officer, director, significant shareholder, or their family members.","Any loan to or from a Related Party requires: (a) full written disclosure of the relationship; (b) Board approval by disinterested directors; (c) terms no more favorable than those available to unrelated parties; and (d) disclosure in the organization's annual financial statements.","Treating related-party loans the same as employee loans, skipping independent approval — which exposes the organization to self-dealing claims and regulatory penalties.",{"name":322,"plain_english":323,"sample_language":324,"common_mistake":325},"Monitoring, reporting, and covenant compliance","Requires periodic reporting on the loan portfolio to senior management and the board, including delinquency rates, outstanding balances, and covenant compliance.","The CFO shall present a Loan Portfolio Report to the Board at each quarterly meeting, summarizing outstanding balances, payment status, covenant compliance, and any loans more than [X] days past due.","Generating loan reports only when a problem surfaces, rather than on a fixed schedule — which means defaults are discovered late and recovery prospects are reduced.",{"name":327,"plain_english":328,"sample_language":329,"common_mistake":330},"Default procedures and remedies","Defines what constitutes default, the required cure period and notice, and the escalating remedies available to the organization.","A loan is in default when payment is [X] or more days overdue, or upon the borrower's insolvency. The organization shall provide written notice of default and a [X]-day cure period before initiating collection, payroll deduction (for employee loans), or legal proceedings.","Omitting a cure period entirely, which can expose the organization to claims of bad faith if it moves to collect without giving the borrower a chance to remedy a brief administrative delay.",{"name":332,"plain_english":333,"sample_language":334,"common_mistake":335},"Write-off authority and bad-debt process","States who can authorize writing off an uncollectable loan, the documentation required, and how the write-off is recorded in the organization's accounts.","Loans up to $[AMOUNT] may be written off by the CFO with documented evidence of uncollectability. Amounts exceeding $[AMOUNT] require Board authorization. All write-offs shall be recorded to the Provision for Loan Losses account and disclosed in the next financial report.","Not requiring documentation of collection efforts before a write-off is authorized — which eliminates the evidence needed to support a bad-debt deduction for tax purposes.",[337,342,347,352,357,362,367,372],{"step":338,"title":339,"description":340,"tip":341},1,"Define the scope and identify excluded transactions","Name the legal entity the policy covers and list every loan type in scope — employee advances, shareholder loans, intercompany lending. Then explicitly list what is excluded, such as trade credit or operating-lease obligations.","A clear exclusion list prevents scope disputes during audits far more reliably than a broad inclusion statement.",{"step":343,"title":344,"description":345,"tip":346},2,"Set approval authority tiers with specific dollar thresholds","Create at least three tiers — manager, CFO, and board — with dollar ranges for each. Ensure the thresholds reflect your organization's actual transaction sizes so the policy is used in practice.","Set the board-approval threshold 20–30% above your largest likely single loan, so routine transactions don't require a special board meeting.",{"step":348,"title":349,"description":350,"tip":351},3,"Define borrower eligibility and disqualification rules","State minimum tenure, employment status (permanent vs. contract), and any automatic disqualifiers such as active disciplinary proceedings or prior loan defaults with the organization.","Run this section past HR before finalizing — eligibility rules that conflict with employment policies create grievance risk.",{"step":353,"title":354,"description":355,"tip":356},4,"List required documentation with a pre-disbursement checklist","Enumerate every document required before a loan is funded and build it into a checklist that the approving officer signs. Common items: signed loan agreement, promissory note, proof of purpose, and collateral documentation.","Attach the checklist as a policy appendix rather than embedding it in the body — it is easier to update independently as requirements change.",{"step":358,"title":359,"description":360,"tip":361},5,"Set the interest-rate floor linked to the current AFR","State the minimum rate as 'the short-term IRS Applicable Federal Rate for the month of disbursement' rather than a fixed percentage, so the policy stays compliant as rates change.","Task the CFO to document the AFR on the date of each disbursement and attach it to the loan file — this is the primary evidence in an IRS audit of below-market loan claims.",{"step":363,"title":364,"description":365,"tip":366},6,"Specify collateral thresholds and perfect security interests","State the loan size above which collateral is required, the minimum LTV ratio, and acceptable collateral types. Include a requirement that a UCC-1 financing statement or equivalent lien be filed before disbursement for secured loans.","Never rely on a promise to provide collateral after disbursement — by that point there is no practical way to enforce it without suing the borrower.",{"step":368,"title":369,"description":370,"tip":371},7,"Write the related-party lending section last and have it reviewed","Draft the related-party section after all other sections are finalized so you can cross-reference the standard terms. Require independent director approval and annual financial-statement disclosure for all related-party loans.","For nonprofits, mirror the language from IRS Form 990, Part VI, Schedule L — it will satisfy the form's disclosure requirements directly.",{"step":373,"title":374,"description":375,"tip":376},8,"Obtain board adoption and schedule an annual review","Present the completed policy to the board for formal adoption by resolution, record the adoption date, and set a calendar reminder for annual review — particularly to update the AFR reference and approval thresholds.","Version-control the policy with a header showing the adoption date and next scheduled review date so auditors can confirm it is current.",[378,382,386,390,394,398],{"mistake":379,"why_it_matters":380,"fix":381},"Setting a fixed interest-rate floor instead of linking to the AFR","A rate that was above the AFR when the policy was adopted can fall below it if the AFR rises, creating imputed-interest income for the borrower and a reporting obligation for the organization.","Define the floor as 'the current IRS short-term Applicable Federal Rate at the time of disbursement' and require the CFO to document the applicable rate for every loan issued.",{"mistake":383,"why_it_matters":384,"fix":385},"Omitting related-party lending as a separate section","Treating officer and director loans identically to employee advances bypasses the independent-approval and disclosure requirements that protect the organization from self-dealing allegations and regulatory penalties.","Create a standalone related-party lending section with mandatory board approval by disinterested directors, arm's-length pricing, and annual financial-statement disclosure.",{"mistake":387,"why_it_matters":388,"fix":389},"Requiring documentation after disbursement rather than before","Once funds are released, borrowers have no incentive to return paperwork; missing files are the most common finding in internal audits of lending programs.","Make a completed, signed pre-disbursement checklist a hard prerequisite for releasing funds, with the approving officer's signature confirming the file is complete.",{"mistake":391,"why_it_matters":392,"fix":393},"No write-off documentation requirement","Writing off a loan without documenting collection efforts eliminates the evidence needed to support a bad-debt deduction for tax purposes and exposes the organization to questions about whether the write-off was authorized properly.","Require a written summary of collection steps taken — demand letters, payroll deduction attempts, legal review — before any write-off authorization is valid.",{"mistake":395,"why_it_matters":396,"fix":397},"A single approval tier for all loan sizes","Routing a $300 payroll advance to the board for approval makes the policy unworkable; staff will bypass it, creating undocumented loans that surface only during audits.","Build at least three tiers — manager, CFO, and board — with specific dollar thresholds calibrated to your organization's actual transaction volume.",{"mistake":399,"why_it_matters":400,"fix":401},"No defined monitoring or reporting schedule","Without a fixed reporting cadence, delinquent loans are discovered late, recovery is harder, and the board has no visibility into the organization's credit exposure.","Require the CFO to present a written loan portfolio report at every quarterly board meeting, covering outstanding balances, payment status, and any past-due accounts.",[403,406,409,412,415,418,421,424,427],{"question":404,"answer":405},"What is a loan policy?","A loan policy is a formal governance document that defines the rules an organization follows when extending or receiving loans. It specifies who can authorize a loan, what documentation is required before disbursement, how interest rates are set, what collateral is needed, how related-party loans are controlled, and who holds authority to write off uncollectable amounts. The policy creates a consistent, auditable framework that protects the organization from undocumented lending and potential tax or regulatory exposure.\n",{"question":407,"answer":408},"Who needs a loan policy?","Any organization that regularly extends loans to employees, shareholders, or affiliated entities needs a documented loan policy. This includes credit unions, nonprofits (which face IRS scrutiny on related-party transactions disclosed in Form 990), small businesses that advance funds to owners or shareholders, and companies with intercompany lending arrangements across subsidiaries. Even organizations with infrequent loan activity benefit from a policy to prevent ad-hoc, undocumented transactions.\n",{"question":410,"answer":411},"What should a loan policy include?","A complete loan policy covers: purpose and scope, approval authority tiers with dollar thresholds, borrower eligibility criteria, pre-disbursement documentation requirements, an interest-rate floor linked to the IRS Applicable Federal Rate, collateral requirements and security interest perfection, enhanced controls for related-party lending, periodic monitoring and reporting obligations, default procedures with cure periods, and write-off authority with documentation requirements.\n",{"question":413,"answer":414},"What is the Applicable Federal Rate and why does it matter for a loan policy?","The Applicable Federal Rate (AFR) is the minimum interest rate the IRS publishes monthly for loans between related parties. If your organization charges less than the AFR on a loan, the IRS treats the difference as imputed interest — creating taxable income for the borrower and a reporting obligation for the lender. Setting your loan policy's interest-rate floor at or above the current AFR, and documenting it at the time of each disbursement, is the primary protection against imputed-interest findings on audit.\n",{"question":416,"answer":417},"How are related-party loans different from standard employee loans?","Related-party loans — those made to officers, directors, significant shareholders, or their family members — carry a higher risk of self-dealing and regulatory scrutiny. They typically require board approval by disinterested directors, disclosure in annual financial statements, and terms that are no more favorable than those available to unrelated borrowers. Standard employee loans usually only require manager or CFO approval and do not trigger the same disclosure obligations.\n",{"question":419,"answer":420},"Does a loan policy need to be approved by the board?","For most organizations, yes. Board adoption provides the policy with organizational authority and creates a clear record that governance over lending activity has been formally established. For nonprofits, board adoption is particularly important because the IRS Form 990 asks whether the organization has a written policy governing loans to or by officers and directors. Documenting the adoption date and version is good practice for audit readiness.\n",{"question":422,"answer":423},"How often should a loan policy be reviewed?","An annual review is standard, and it should be triggered earlier whenever the IRS adjusts the AFR significantly, approval thresholds become misaligned with actual transaction sizes, or the organization starts a new type of lending program. Version-control the policy with an adoption date and next-review date in the header so auditors can confirm the document is current.\n",{"question":425,"answer":426},"Can a loan policy apply to both loans the organization makes and loans it receives?","Yes, and it should. Many organizations focus only on loans they extend to employees or related parties, overlooking the governance of loans they receive from shareholders, owners, or affiliated entities. Both directions of lending create documentation, interest-rate, and disclosure obligations. A well-drafted scope section explicitly covers both outbound and inbound loans.\n",{"question":428,"answer":429},"What happens if an organization doesn't have a loan policy?","Without a policy, lending decisions are made informally and inconsistently. Common consequences include undocumented loans that are reclassified as taxable income on audit, related-party loans that trigger self-dealing findings, write-offs that cannot support a bad-debt deduction for lack of documentation, and board members who are unaware of the organization's credit exposure. Auditors and lenders routinely flag the absence of a written loan policy as a governance deficiency.\n",[431,435,439,443],{"industry":432,"icon_asset_id":433,"specifics":434},"Credit unions and community banks","industry-fintech","Member loan approval criteria, NCUA or state banking regulator compliance, and tiered approval authority aligned to lending limits.",{"industry":436,"icon_asset_id":437,"specifics":438},"Nonprofits and foundations","industry-nonprofit","IRS Form 990 Schedule L disclosure requirements, related-party controls for officer loans, and program-related investment documentation.",{"industry":440,"icon_asset_id":441,"specifics":442},"Corporate and enterprise","industry-professional-services","Intercompany loan governance, transfer-pricing compliance for cross-border advances, and treasury policy alignment.",{"industry":444,"icon_asset_id":445,"specifics":446},"Small and medium businesses","industry-small-business","Shareholder and owner loan documentation for lender due diligence, payroll-advance programs, and write-off authority for the CFO or owner.",[448,451,454,457],{"vs":87,"vs_template_id":449,"summary":450},"loan-agreement-D167","A loan agreement is a transaction-level document that records the specific terms of a single loan between named parties — amount, rate, repayment schedule, and remedies. A loan policy is an organizational governance document that sets the rules all loan agreements must follow. You need the policy to govern how agreements are made, and the agreement to document each individual transaction.",{"vs":242,"vs_template_id":452,"summary":453},"credit-and-collections-policy-D13270","A credit and collections policy governs how the organization extends credit to customers in the ordinary course of trade — payment terms, credit limits, and collections procedures for overdue receivables. A loan policy governs formal lending arrangements, typically to employees, shareholders, or related entities, with interest rates, collateral, and write-off authority. The two documents cover different transaction types and usually sit in different parts of the finance manual.",{"vs":46,"vs_template_id":455,"summary":456},"promissory-note-D172","A promissory note is the borrower's written promise to repay a specific sum under defined terms — it is the legal instrument that creates the debt obligation. A loan policy is the internal governance framework that determines when and how promissory notes may be issued. The policy mandates the note; the note evidences the loan.",{"vs":458,"vs_template_id":459,"summary":460},"Finance Policy","finance-policy-D13271","A finance policy covers the full spectrum of financial controls — budgeting, expenditure authority, banking arrangements, and reporting. A loan policy is a focused subset addressing only lending activity. Organizations with a comprehensive finance policy may embed loan rules within it, but separating them into a standalone document is better practice when lending volume or complexity warrants dedicated governance.",{"use_template":462,"template_plus_review":466,"custom_drafted":470},{"best_for":463,"cost":464,"time":465},"Small businesses, nonprofits, and organizations with straightforward employee or shareholder loan programs","Free","2–4 hours to customize and adopt",{"best_for":467,"cost":468,"time":469},"Organizations with related-party lending, cross-border intercompany advances, or audit-sensitive environments","$300–$800 for a CFO or accountant review","1–3 days",{"best_for":471,"cost":472,"time":473},"Regulated lenders, credit unions, or enterprises with complex multi-entity treasury structures requiring regulatory alignment","$1,500–$5,000+","2–4 weeks",[475,476],"applicable-federal-rate-explained","related-party-transactions-governance",[230,246,243,478,479,480,481,482,483,484,485,486],"investment-policy-statement-D12883","accounts-receivable-D308","expense-reimbursement-policy-D13688","conflict-of-interest-policy-for-board-members-D13933","adhesion-to-the-unanimous-shareholder-agreement-D848","non-disclosure-agreement-nda-D12692","board-resolution-D78","financial-projections_12-months-D360","small-business-expense-report-D13396",{"emit_how_to":488,"emit_defined_term":488},true,{"primary_folder":97,"secondary_folder":490,"document_type":491,"industry":492,"business_stage":493,"tags":494,"confidence":500},"loans-and-promissory-notes","policy","general","all-stages",[495,496,497,498,499],"governance","compliance","loan-policy","lending","credit-management",0.95,"\u003Ch2>What is a Loan Policy?\u003C/h2>\n\u003Cp>A \u003Cstrong>Loan Policy\u003C/strong> is a formal governance document that defines the rules an organization follows whenever it extends or receives a loan — covering approval authority, borrower eligibility, required documentation, interest-rate floors, collateral requirements, related-party lending controls, and write-off authority. Unlike an individual loan agreement, which records the terms of a single transaction, a loan policy establishes the organizational framework that governs every lending decision the organization makes. It ensures that loans are approved at the right level, documented before funds are released, priced above the IRS Applicable Federal Rate, and reported to the board on a consistent schedule.\u003C/p>\n\u003Ch2>Why You Need This Document\u003C/h2>\n\u003Cp>Without a written loan policy, lending activity inside an organization becomes ad hoc and undocumented — creating four concrete risks. First, undocumented loans to officers or shareholders are routinely reclassified as taxable compensation on audit, resulting in back taxes and penalties for both the organization and the recipient. Second, loans made below the IRS Applicable Federal Rate trigger imputed-interest income without anyone on either side realizing it. Third, related-party loans approved without independent oversight expose directors and executives to self-dealing allegations that can void the transactions entirely. Fourth, write-offs taken without documented collection efforts cannot support a bad-debt deduction for tax purposes, turning a loss into a disallowed expense. A clearly adopted loan policy, reviewed annually and applied consistently, closes all four gaps — and signals to auditors, lenders, and regulators that the organization's financial governance is credible and controlled. This template gives you a complete, editable starting point you can adapt, adopt by board resolution, and put into practice the same day.\u003C/p>\n",1781185969150]