• Version 1.0

• Prepared by: @Lorraine Sebata

• Approved by: @Feli Capron

• Reviewed date: 2025-07-24

• Next review date: 2026-07-24

1. Purpose

This SOP outlines the process for disbursing approved loan proceeds to clients. The objective is to ensure that disbursements are accurate, timely, and fully compliant with internal controls and financial regulations. It also ensures proper documentation, transparency, and accountability in all loan disbursement activities.

2. Scope

This SOP covers the end-to-end process of loan disbursement, from the final approval of the loan application to the transfer of funds to the client's designated account. It applies to all loan products offered by the organization, including short-term personal loans and small business loans. All personnel involved in the loan disbursement process, including Loan Officers, Accounting Staff, and Customer Experience Officers, must follow the procedures outlined in this document.

3. Related Policies

• Credit and Loan Approval Policy

• Anti-Money Laundering (AML) Policy

• Customer Data Privacy Policy

• Cash Management SOP

4. Roles and Responsibilities

• Loan Officer: Verifies loan documentation, submits applications for disbursement, and coordinates with the Accounting Staff.

• Accounting Staff: Processes disbursement batches, formats and sends batch files for fund release, and ensures accurate fund transfer.

• Customer Experience Officer: May assist in confirming receipt of funds by clients and addressing initial post-disbursement inquiries.

• Client: Acknowledges receipt of disbursed funds.

5. Procedure: Loan Disbursement Processing

5.1 Document Verification (Loan Officer)

5.1.1 Navigate to the specific client application in the LMS.

5.1.2 Go to the "Execute Documents" tab within the client's application.

5.1.3 Review the Salary Deduction Form:

• Confirm that the document is correctly named.

• Verify that the document is dated.

• Ensure the document is properly signed by all required parties.

• Confirm that the document is stamped appropriately (if required).

5.1.4 Review the Financing Agreement:

• Verify that the monthly payment amount is accurate as per the approved loan terms.

• Confirm that the installment start date is correct and aligns with the loan schedule.

• Ensure these details accurately reflect the type of loan:

  • For a top-up or consolidation loan, confirm that the dates reflect the updated obligations and repayment schedule.

  • For a new loan, verify that the initial payment details and date are correctly calculated and documented.

5.2 Submission for Disbursement (Loan Officer)

• 5.2.1 Once all required documents have been thoroughly verified and confirmed to be accurate and complete, submit the application for disbursement within the LMS. This action typically changes the application status to "Disbursement Recommended" or similar.

5.3 Identification of Approved Loans for Disbursement (Loan Officer)

• 5.3.1 Open the Loan Management System (LMS).

• 5.3.2 Navigate to the "Applications" tab.

• 5.3.3 Locate the filter or search options within the "Applications" tab.

• 5.3.4 Under the "Status" or "Application Stage" filter, select the following statuses:

  • "Disbursement Recommended"

  • "Payout Recommended"

• 5.3.5 Apply the selected filter to display only applications with the specified statuses that are ready for disbursement.

5.4 Processing Disbursement Batch (Accounting Staff)

• 5.4.1 Navigate to the "Disbursements" tab in the LMS.

• 5.4.2 Select all applications that have been submitted and are ready for disbursement.

• 5.4.3 Create a batch file containing the selected applications. The system will typically generate this file in a pre-defined format (e.g., CSV, XML).

• 5.4.4 Download the generated batch file to a secure local computer or network drive.

5.5 Formatting and Sending Batch File (Accounting Staff)

• 5.5.1 Open the downloaded batch file using appropriate software (e.g., spreadsheet program).

• 5.5.2 Format the spreadsheet as per the required standards for the financial institution or payment gateway (e.g., specific column headers, data alignment, currency format, removal of unnecessary columns).

• 5.5.3 Save the formatted file appropriately, ensuring it adheres to naming conventions and is stored in a designated secure location.

• 5.5.4 Send the formatted batch file to the designated person or department responsible for releasing funds (e.g., Treasury Department, bank liaison) via secure communication channels (e.g., encrypted email, secure file transfer protocol).

5.6 Fund Transfer and Client Notification (Accounting Staff / Loan Officer)

• 5.6.1 The designated department releases the funds based on the received batch file.

• 5.6.2 Accounting Staff verifies the successful transfer of funds through bank statements or payment gateway confirmations.

• 5.6.3 Loan Officer or Customer Service Representative informs the client of the successful disbursement and confirms receipt of funds.

6. Documentation and Forms

• Loan Management System (LMS) records (Disbursement Recommended, Payout Recommended, Disbursed statuses)

• Salary Deduction Form

• Financing Agreement

• Disbursement Batch Files (generated and formatted)

• Bank Transfer Confirmations / Payment Gateway Receipts

• Client Acknowledgement of Fund Receipt

7. Training

All Loan Officers, Accounting Staff, and Customer Experience Officers involved in the loan disbursement process will receive mandatory training on this SOP and related policies annually or upon significant revisions.

8. Review and Revision

This SOP will be reviewed annually by the Operations and Finance Departments to ensure its continued effectiveness, compliance, and alignment with business objectives.