1. Loan Documentation Procedure
One of the important process in lending is loan documentation. This entails
proper information and training to have a full understanding of what the
documents signify, its relevance for the over-all efficiency of the product
delivery as well as its impact on the over-all quality loan portfolio. To attain
this, proper procedures should be strictly followed and completed.

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

3. 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
READ THE SLIDE...
(After reading the slide, distribute a copy of the document to each of the
participants. Then explain each relevant sections or items to be filled-up in the
document. If necessary, show how the section or item which should be filled-up
e.g. computations, or better yet, show a completed or fully-filled up loan
document.)
Can be handwritten. But if handwriting is not legible, should be typewritten
With client’s picture ID and any other requirements

4. 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
READ THE SLIDE...
A similar CIBI report will be prepared for repeat loan applicants. The same procedure should be followed.
This is one of the documents that objectively show WHO THE CLIENT IS-
His family and credit background, in a word, this report tells us about a lot of
salient pieces of information that the bank should seriously take a look at
during the evaluation of the application and his/her over-all credit worthiness.
It should be noted that all information gathered by the Account Officer should
be TOTALLY & OBJECTIVELY COMPLETE. Any lacking information in
the report will directly affect all the other contents of the loan documents.
(After reading the slide, distribute a copy of the document to each of the
participants. Then explain each relevant sections or items to be filled-up in
the document. If necessary, show how the section or item which should be
filled-up e.g. computations, or better yet, show a completed or fully-filled
up loan document.)

5. 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
READ THE SLIDE...
A similar document is available for repeat loans. Repeat loan applicants will have to fill a new form which also contain information about their loan history.
(After reading the slide, distribute a copy of the document to each of the
participants. Then explain each relevant sections or items to be filled-up in the
document. If necessary, show how the section or item which should be filled-up
e.g. computations, or better yet, show a completed or fully-filled up loan
document.)
Can be handwritten

6. 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
READ THE SLIDE...
This is the document that is very useful during the Credit Committee meeting.
It summarizes all the information gathered by the AO-- his observations and
his impressions toward the applicant. It should be noted that all the information
summarized in this report are related with the other basic reports particularly
the Credit and Background Investigation Reports. If during the CreComm
meeting the AO will have an over-all negative or aversive feeling on his report,
the decisions made by the CreComm members will be affected. Thus it is
required that this document should be completely signed by the CreComm
Chairman as well as the CreComm members. A loan should not be processed
if this document is not properly signed.
(After reading the slide, distribute a copy of the document to each of the
participants. Then explain each relevant sections or items to be filled-up in the
document. If necessary, show how the section or item which should be filled-
up e.g. computations, or better yet, show a completed or fully-filled up
loan document.)

7. 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
READ THE SLIDE...
(After reading the slide, distribute a copy of the document to each of the
participants. Then explain each relevant sections or items to be filled-up in the
document. If necessary, show how the section or item which should be filled-
up e.g. computations, or better yet, show a completed or fully-filled up loan
document.)

8. 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
READ THE SLIDE...
(After reading the slide, distribute a copy of the document to each of the
participants. Then explain each relevant sections or items to be filled-up in the
document. If necessary, show how the section or item which should be filled-
up e.g. computations, or better yet, show a completed or fully-filled up
loan document.)

9. 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
READ THE SLIDE...
(After reading the slide, distribute a copy of the document to each of the
participants. Then explain each relevant sections or items to be filled-up in the
document. If necessary, show how the section or item which should be filled-
up e.g. computations, or better yet, show a completed or fully-filled up
loan document.)

10. Any Question?