Q: If a loan was refinanced and the payments revised based on the refinanced balance, can the loan account still be in arrears? Doesn’t the refinancing and revised payments take into consideration any prior arrears?
A: Arrears are always a little tricky with refinanced outstanding amounts since a human must take a decision as to whether the new payments to be added are simply extra payments or are to compensate for the unpaid payments in the past. The examples will help…
A most important column in the schedule is the “Expected Pmt” column. This column indicates how much was expected for this line and subtracts the actual payment amount from this amount to generate the Outstanding amount.
- On 07-06-2018 I was expecting 439.58 and got a 439.58 payment so Outstanding = 0.00.
- On 10-06-2018 I was expecting 439.58 and got 0.00 so Outstanding = 439.58 and so forth
If an extra payment (unexpected in the normal scheme of things) is made, then the Expected Pmt should be 0.00 and the Outstanding is thus reduced.
If a loan is refinanced, you must make sure that as of this moment, your Outstanding amount gets progressively reduced to 0.00 and you do this with the Expected Pmt column in which you would put the Expected Pmt to 0.00 for the new payments that are added or changed to give 0.
In the above example, the loan is refinanced with lower payment amounts since the 439 was too high for the borrower – 6 payments were added and these now become 175.20 to reach 0.00. One could argue that these payments are extra and thus the Expec. Pmt should be 0.00 for each, so we manually change the Expect. Pmt to 0.00.
NOTE: In order to be allowed, to change the Expected Pmt amount, this must be allowed by the Margill Administrator in Settings:
As these new payment become paid over time, the Outstanding amount gets reduced…
If on the other hand, a second amount (new Advance) was lent to the borrower and extra payments were added, then I would not change my Expected Pmts to 0.00 since these new payments become part of the normal payments, in the normal scheme of things. So Outstanding is quite subject to interpretation…
I actually cheated below by entering 3 of the 12 new payments with Expected Pmt of 0.00 to bring my Outstanding back to 0.00. Outstanding must be 0.00 or greater, never less than 0.00 even if one could argue the borrower overpaid.
Q: I have set up automatic emails in Margill Loan Manager. We use G Suite for these but when I test the email connection if get a message saying the Google blocked the app since it is a less secure app. What can be done?
A: We see this once in a while when using GSuite.
Margill has no control over this since Margill simply sends a request to the Gmail (or other) SMTP server and this server checks your User name and Password and accepts to send the email or not. Pretty straightforward stuff, no big technology behind this…
However, GSuite or other mail providers may not accept the communication since it is sent by a software that they do not recognize and may give you a message such as:
You will thus have to allow your email account to communicate with Margill. Log into the G Suite Admin Console (https://gsuite.google.com). You must be the G Suite administrator. Go into security settings and click “Allow users to manage their own access to less secure apps”. Then go into your own Gmail settings and turn on the “Allow access to less secure apps (not recommended)”. Google will tell you a number of times that this is unsafe.
This should now allow the communication.
Setting up and Servicing Cash-flow adapted Agricultural (Farm) Loans Efficiently
Most farmers have special needs when it comes to their loans to buy land, equipment and other farm assets because of their seasonal cash-flow and income spikes. Therefore, agricultural loan products shouldn’t be set up like conventional personal or business loans or mortgages with regular fixed payments, but rather adapted to each farmer’s particular revenue and expenditure rhythms.
A crop farmer most often has greatest cash needs in late Winter (next season purchases), Spring and Summer and greatest cash income in Fall at harvest. Livestock farmers on the other hand, can usually generate steadier expense and income streams.
Depending on crop type and location of the farm (colder countries versus subtropical or tropical countries), there may be two or more harvest seasons. Harvests can be considered Good or Poor, adding yet another cash-flow need to be considered when setting up a loan payment plan.
Lines of credit offer much flexibility of course to the farmer, allowing to borrow and refund as needed. When lines of credit are not available, for capital purchases for example, amortizing loans become the best option. Calculating a comprehensive, cash-flow adapted payment plan for the farmer can become so difficult with conventional calculation tools or spreadsheets, that small agricultural lenders simply cannot easily cater to their clients’ particular needs.
Margill Loan Manager makes lenders’ tasks so much easier with a what-you-see-is-what-you-get approach to creating the payment/amortization schedule based on an predicted cash flow.
We’ve also included an example of a short-term, bridge loans we often see in AG loans.
Example 1: Interest-only during low season with principal and interest during the harvest months
Step 1: Create loan with normal amortization
Let’s say this for only 24 months (could be years, no matter)…
Press on “Compute’ to create this normal P&I schedule which you can now adapt line by line or in bulk.
Step 2: Highlight the interest-only months (lines) and right click:
Step 3: Highlight the principal and interest (P&I) months to fully amortize (0.00 balance).
Get the proposed payment plan in seconds – notice below that the payments for the interest-only months (lines 14 to 20) have been recalculated automatically since lines 9-13 pay off principal thus reducing the accrued interest (this automatic re-computation is called a Line Behavior – a pretty sophisticated feature).
Notice the payment amount for line 1 (479.88) is higher since payment was over 1 month after the origination date (what is called a long period).
Example 2: Higher set payments during the high cash-flow months and normal amortization during the slow months
Once the preliminary schedule is calculated:
Highlight high revenue months, right click – let’s say the farmer can pay 4000 per month during these 5 months of the year. Margill will ask you to enter the payment amount for the selected lines.
Now select the remaining P&I lines and compute the payment to produce a 0.00 balance:
The resulting payment plan:
Example 3: Over time payments were made, missed and late, fees were automatically added and so another 6 payments are added to the loan as well as a new 20,000 loan approved on April 12, 2021
We first inserted a new line – line 19 below – with the right mouse click or the button in which we entered the 20,000 loan (called an “Add. Principal (Loan)” type transaction). Then we added the 6 extra payments at the end of the schedule:
The payments after the 20,000 loan are then re-amortized (could have been special lump sum payments in there too):
Below is the schedule containing the past payments and the future expected payments to fully amortize the loan that now stretches on to May 2022:
Example 4: Bridge loan to help farmers who are expecting to receive a state or federal grant. The grant only comes in (paid by the government) after the project is completed. Interest can be charged normally or a simple Fee charged since interest may be too low for 2-3 month loans.
In this example, we have a 10,000 loan for approximately 3 months (we estimate payment on August 1 – date can change later on):
The preliminary result after Compute:
I then must add my Fee (200) – I can add either a fee or consider this fee to be interest. You have both options in Margill with Line statuses.
Press on to insert a line (or right click with the mouse):
Fees could be paid up front:
Or paid at the time of full repayment on August 12 for example (for accounting purposes, Fees must be paid separately from the principal so they are properly accounted for):
Some would like to consider the 200 as interest so we use a Line status called “Interest Charged” and this shows in the Accrued Interest column:
We can split the payment in two or could have one payment of 10,200, no matter (either way, payment will automatically post 200 to interest first and 10,000 to principal):
As a agricultural lender you run into other scenarios? Please let us know and we’ll add to this blog! Write to email@example.com or call at 1-877-683-1815 or 001-450-621-8283 and talk to Marc.
Q: Is there an Alert that we can add that will pop up when we attempt to add more principal than what we have set as the maximum credit?
A: Yes, this is called a Conditional Alert.
In the Main window go to Tools > Settings > Set Alerts > Conditional:
When the window opens, click on “New” and the window below will appear allowing you to name the Alert and its condition.
Your condition is quite simple: warn the user when Initial Principal + any additional Principal (as a Line status) added is greater that the amount entered in the Maximum Credit field. Go to the themes on the left to get the proper fields.
You then enter the message that should be displayed to the user when this condition is met.
Save the Alert and you will get back to the list of Conditional Alerts page. Highlight the newly created Alert (the one in blue) and press on both buttons: Apply to existing Active Records and the Apply to Records as they become Active.
You could also use Custom fields for extra criteria and even Equations to, for example, “add these 4 fields” that must be less than this other field.
Now, in this example, we have Credit limit of 2 million and the user tried adding another million to the existing 1.5 million and got this warning when saving…
Another maximum credit tool allows you to set a maximum by Borrower – this is useful if a Borrower has multiple loans in the portfolio:
Q: We have added some custom fields for additional loan information. Is there a way we can mass import only those specific custom fields in Loan Manager?
A: Yes you can mass import data into Margill Loan Manager. This is with what we call “Global changes”.
This can be done for the loan, mortgage, line of credit, lease, etc. (the Record) or for the Borrower.
For adding new information or changing data in many Records at once, sort these in the Main window, choose the desired Records, highlight these and right click with the mouse. Choose Global changes:
This window will appear showing the various fields that can be changed.
There are over 30 fields that can be changed plus all Custom fields.
Select the field you wish to add data to (or change data) and press on Refresh. You can only add data to one field at a time.
Your can then highlight the Records and with the right mouse click add/change the data in bulk. Case being, you will see existing data and can replace these or not. Use the Ctrl or Shift key and mouse to pick and choose the desired lines.
Below is the option when a scroll menu exists for the Custom field. If the field was a Text field for example, you would simply enter any text (no menu).
If the data is never the same, for example, adding the date of birth for Borrowers, you can add the data line by line.
Once the data is entered or changed, press on Save (bottom right). The changes will be made.
Adding data via spreadsheet (Sorry not yet… but coming soon):
- In version 5.0.x coming up in a few weeks, you will be able to make these Global changes with a spreadsheet (Excel). All you will need are two columns (a loan Identifier – our “MLM Record ID” or one of the two “Unique Identifiers”. “File”, “File Number” and “Accounting ID” are not allowed since these may not be unique identifiers). It is strongly recommended to start using the Unique Identifiers offering much more versatility.
This is not the same as adding a new loan or Borrower in the database – this can be done through Tools, Settings, Special and:
You can also use the Global changes for these practical changes:
- Change Active Records to Closed after your fiscal year end
- Activate Automatic fees
- Enable or disable the sending of email reminders to your Borrowers
- Activate the Electronic Funds Transfer for a bunch of Records at once
- Add banking data to your Borrowers
- Make corrections in bulk
- Add Metro 2 credit reporting compulsory data to the loans and Borrowers
- Update and change most Borrower data and their Custom fields
Q: I wish to change from my current loan servicing platform to Margill Loan Manager. Can I import my existing loans or will I have to enter these one by one?
A: Mass import can be done easily with simple spreadsheets (Excel).
You can import:
- Borrower data
- Creditor data
- Employer data
- Basic loan information (loan type, loan amount, interest rates, dates, amortization, method, custom fields, etc.)
- Individual historical payments (paid, partial and late payments, additional advances, etc.)
Go to Tools > Settings > Special section >
Your Excel sheet must list all the data column by column. This is a sample spreadsheet for importing loan information.
Select the spreadsheet and then map the spreadsheet columns to the proper Margill fields:
You could have one single spreadsheet with Loan and Borrower information and map some columns but not others depending on where the data fits (Loan or Borrower).
You can save this format to use over and over to add more loans and Borrowers in bulk.
Please contact Margill Support to obtain a sample sheet with more import information…
You can also import individual transactions with an Excel sheet:
The Transaction type columns uses a number to identify the transaction type: payment, advance, etc. Comments and a host of other data can also be added such as Check number…
Importing loans and Borrowers takes no time at all. The challenge lies in getting the proper information from your existing system into the Excel sheet. The Margill team is there to help in this transition.
See also how to add data in bulk once the loan or Borrower is entered in the database: https://www.margill.com/en/mass-data-entry-global-database-changes-adding-new-data-in-the-database-in-bulk-mass-database-changes-in-margill-loan-manager/
PS: Good idea switching from your other system to Margill 😉
After a two-year process, Margill Loan Manager 5.0 is now available for download! A new look, but without changing the way you work, a host of new features to make your lives even easier. See the Release Notes: https://www.margill.com/en/margill-loan-manager-release-notes.
To download go to https://www.margill.com/get
Stay tuned for our 20 minute Webinar on what’s new in 5.0 for early October. We will send our clients an email with the date, time and link… Time well invested!
Interesting article by Zachary R. Mider about New York Governor Andrew Cuomo who signed a bill aimed at preventing predatory lenders from using the state’s court system to seize the assets of small businesses nationwide. Read the article here.
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