Lending more on an existing account

A customer with a live loan asks for more money. Two actions can pay it out, and they are not interchangeable.

Your organisation decides which of the two each product offers. A personal loan may offer only a further advance; an access facility usually offers both.

flowchart TD
    A[Money out to a customer on a loan they already have] --> B[Further advance]
    A --> C[Readvance]
    B --> D[New lending, no cap]
    C --> E[Capped at what the customer has paid ahead]
    D --> F[The balance rises by the amount drawn]
    E --> F
    F --> G[The money is paid out to a nominated account]
    D --> H[The remaining instalments are worked out again]

Making a further advance

Use Further advance when the customer is borrowing money they have not borrowed before.

1. Open the account and select Actions, then Further advance.
2. Enter the Amount.
3. Check Pay To — the account the money goes to.
4. Select Apply, then Submit for approval.

On some products Pay To opens pre-filled with the account the loan was originally paid out to. That is set up per product by your organisation.

What the money does

The balance rises by the amount you drew, and the draw books to the general ledger as capital lent.

Take a loan of 100,000 with an initiation fee of 1,000, running over twelve months. Alex draws a further advance of 25,000. The balance rises by exactly 25,000, and the capital on the ledger covers all three amounts.

The repayment plan is worked out again

A further advance lends more capital against the same end date, so the remaining instalments have to grow. The plan re-solves as soon as the draw goes through, and the total still to repay rises with it.

Instalments that have already fallen due are untouched. Only the future rows move. The customer’s next statement carries the new instalment.

Making a readvance

Use Readvance when the customer is taking back money they have already paid in. Nothing new is lent — the draw is limited to the amount they are ahead by.

Readvance only becomes available once the customer is ahead. On an account that is level, or an account in arrears, the action stays in the Actions menu but is greyed out, and hovering it says why.

The cap, and what it costs to use

The Amount box opens pre-filled with everything the customer has paid ahead, so you can see the ceiling without working it out.

Jordan holds a 750,000 access facility with Woodgrove Bank and is 12,000 ahead.

A readvance spends the overpayment. Drawing 12,000 puts Jordan back to level, so the same 12,000 cannot be drawn a second time. To make it available again, they have to pay ahead again. See how a repayment is recorded.

The cap is checked twice: once when the menu decides whether to offer the action, and again when you submit. A repayment falling due in between can shrink the cap, so an action that looked available can still refuse on submission. The message tells you the limit.

What is checked before the money goes out

The readvance carries its own ceiling: you cannot readvance more than the customer has paid ahead.

The customer’s limit is checked too. Where the product is wired to a credit limit or a facility, a draw that would take the customer past their headroom is refused, and no money moves.

A customer with 10,000 available who is asked for a further advance of 20,000 sees it refused, naming 20,000 asked and 10,000 available. Nothing is written, so you can raise the limit and try again.

The check counts the whole draw, including a fee the product adds to the balance: a 20,000 advance carrying a 1,000 fee needs 21,000 of headroom.

Where the draw needs a countersignature, you hear the refusal when you ask — nothing is queued for a colleague to approve. A draw that clears at that moment is checked again before it pays, because the headroom can fall while it waits.

To raise the headroom, see credit limits and facilities.

Neither action can be run while the customer is held. Both are refused outright, with a message naming the operation. See hold.

Where the money goes

Both actions push the money out to an account you select in Pay To — the customer’s own bank account, a personal beneficiary captured for this draw, or an approved beneficiary from your organisation’s directory, whichever your organisation allows on this product. It leaves on the next settlement date that account’s payment route allows, which is not always today. See how a payment picks its rail and choosing which account money moves through.

Pay To is always an external account. A further advance or a readvance is never paid into an investment or call account here — it doesn’t normally make sense to take money from a loan and put it into an investment.

The draw itself lands on the account immediately. The two are separate: the loan grows now, the money arrives when the payment settles.

Who has to countersign

Both actions normally need a second person. You submit, somebody else countersigns, and the draw happens once they do. Your organisation sets the approval rules, and a rule covering the action applies even where the product itself does not ask for one. See countersign.

When it takes effect

Where your organisation has set the action up to accept a date, the form shows Value Date and the draw can be dated. Where it has not, no picker appears and the draw takes effect on the current trading day. See value dating.

Afterwards

Both draws appear on the account’s transaction list under their own names, so a further advance and a readvance can be told apart there long after the event. See reading the transaction list.

The ledger may not separate them. Your organisation decides which ledger accounts each draw posts to, and it can point both at the same pair — in which case the transaction list is the only place the difference shows.

Neither action changes the rate. If the new money is to be priced differently, that is a separate change — see changing a rate.