To define a Revolving Loan Facility, users must define a facility with the ability to reuse the paid funds automatically. When the user defines a loan, and a quota, each period it is assumed that this quota is completely withdrawn and used to originate a new loan. Which means the user is not modeling an actual loan, but a loan facility, which re-originates a loan, under an agreed amount, within the defined period. This is a process on the T-REX platform.
Definition in Loan Editor:
First, the user must define the loans, can define loans can be defined as both revolving and regular loans.
Example: See 7 regular loans, and 3 revolving loans:
Applicable Fields:
Re-Investment Loan | Toggle between yes and no, to define whether the loan is a revolving loan or not. |
Funding Account | The Collection Account that will hold the funds which will be used to originate new loans. |
Re-Investment Start Month | The period at which new loans start originating. |
Re-Investment End Month | The periods at which new loans stop originating. |
Funding Month | Aligning revolving loans to bond timeline, see Historical Loans. This is the same principle of pre-funded month. |
Example Notes:
- Users must always define the loan’s rate and amortization term – the balance field will be grayed out once we define it as a revolving loan.
- In the example above, there are 3 revolving loans, the first one uses revolving Account 1 (which we defined under collection accounts), which originates loans under 5% interest rate and amortizes for 100 periods, starting period 5 through period 15.
- The second, uses a revolving account 2, 5%, 100 periods, starting at period 5, ending at period 15 (which means the last time they will originate the new loan will be at period 5, and that loan will amortize for 100 periods – The Reports will then show from period 5 till period 105)
- The third revolving loan, uses the same revolving account as the first loan, but during a different time frame. Two loans can use the same account, but not at the same periods – no overlap is allowed.
- T-REX supports Level Pay and Scheduled Principal Payment methods
- Revolving loans cannot be supported by projects.
Definitions in Bonds
Collection Accounts:
Within the Collection Accounts tab, the collection accounts that will be used for the revolving loans are defined.
To define a new account, the Account Type drop-down must be changed to Revolving. Only accounts which are defined as Revolving will appear in the drop-down in the Loan Editor
Waterfall
Within the Waterfall, the user will define the amount of funds that will be used each period.
Below, a Collection Account to pay each revolving account is defined. The user must define a step for each account, choose a limit, and define the revolving period under the Conditions
Example: There is one collection account paying the first revolving account – “revolving account 1”,
A limit is set – in this case, 500$.
See Dynamic Expressions for more detailed information.
A condition is also set – in this case from periods 5 to 30.
This means – during period 5 until 30, each period 1 loan will be originated for the sum of 500$.
As defined in the Loan Editor, the first revolving loan re-investment period is 5 through 15, and the third revolving loan re-investment period is 20 through 30, and both are using the same account – Revolving 1, which receives funds every period from period 5 till period 30.
Periods 5 through 15, will generate a new loan each period, under the parameters on the first revolving loan, then, period 16 through 19, the funds will accumulate in the revolving account, and in period 20, the entire amount will be originated into a loan under the revolving loan 3 parameters.
Periods 21 through 25 will originate loans with $500 each period.