Step-by-Step: Originating a Loan Application

The Loan Origination Flow (/applications/new) allows loan officers and managers to create a new credit request in six guided steps, protected by strict pre-flight compliance gates.

1. Hard Pre-Flight Eligibility Gates (Step 0)

Before an application can advance past the borrower intake step, the platform enforces two non-negotiable statutory gates:

┌────────────────────────────────────────────────────────────────────────┐
│ Pre-Flight Gate 1: Registration Fee Cleared                            │
│   ├── Client status must be 'active'                                   │
│   └── If 'prospect' or 'pending', blocked with link to settle fee      │
├────────────────────────────────────────────────────────────────────────┤
│ Pre-Flight Gate 2: Compliance KYC Verified                             │
│   ├── Verification status must be 'verified'                           │
│   ├── Expiration horizon must be in the future (expires > today)       │
│   └── If unverified/expired, blocked with link to compliance feed     │
└────────────────────────────────────────────────────────────────────────┘

If either gate is not satisfied, the application wizard hard-blocks with a contextual warning banner:

• “Client registration fee is unpaid. Registration fee must be cleared before applying for credit.”
• “Client KYC is not verified. Compliance verification is required before loan origination.”

Figure 4.1: Pre-flight eligibility gate warning banner blocking progress when fee is unpaid or KYC unverified.

2. The Six Steps of Origination

Step 1: Select Borrower & Eligibility Inspection

• Borrower Lookup: Search by National ID digits (hex, e.g. 13253018, 39136093), formatted client number (number, e.g. HQ-002751), phone, or name.
• Borrower Search Card Anatomy:
  • Registration Chip: Displays <span class="chip ok">active</span> (green) or <span class="chip warn">fee unpaid</span> (amber).
  • KYC Chip: Displays <span class="chip ok">verified: basic</span> (green) or <span class="chip warn">unverified</span> / expired (amber).
  • Eligibility Status: Displays <span class="pill ok">Eligible</span> or <span class="pill warn">Ineligible</span>.
• Pre-Flight Evaluation: The system calls GET /kyc/:client/eligibility to verify the borrower’s tier borrowing limit and collateral standing against institutional policies.
• Select the verified, active client and click Continue.

Figure 4.2: Step 1 Borrower intake search card displaying verified chips, active registration status, and eligible badge.

Step 2: Select Loan Product

• The screen displays all active credit products configured for your branch (e.g., Biashara Growth, Boda Advance, Kilimo Farm Credit, Emergency Facility).
• Each product card displays:
  • Interest calculation method: Flat or Declining Balance.
  • Interest rate and repayment frequency (Weekly, Bi-weekly, Monthly).
  • Minimum and maximum loan amount bounds.
  • Processing fee structure (flat fee plus percentage of principal).
• Click on the product card to select it, then click Continue.

Figure 4.3: Step 2 Loan product selection matrix showing bounds, interest methods, and processing fees.

Step 3: Define Loan Terms & Instant Financial Preview

• Principal Amount: Enter the requested loan amount in the hero number field. The engine enforces the product minimum/maximum and the client’s KYC tier ceiling.
• Tenor / Duration: Enter the number of repayment installments (e.g., 6 monthly installments).
• Loan Purpose: Select the economic use of funds (e.g., Business Stock & Inventory, Agricultural Inputs, Transport Equipment, School Fees).
• Instant Financial Schedule Preview: As you type the amount and tenor, the preview card calculates:
  • Estimated Installment: Equal installment amount due per period (e.g., KES 5,833 / month).
  • Total Interest: Total cost of credit over the full borrowing period.
  • Processing Fees: Upfront administrative fees deducted at disbursement.
  • Total Debt: Total aggregate obligation to be repaid.
• Click Continue.

Figure 4.4: Step 3 Loan terms configuration with instant live preview of installments and debt breakdown.

Step 4: Attach Repayment Capacity Evidence

Every credit facility requires documented proof of debt-service capacity:

• Click Attach Evidence.
• Select the document type: M-Pesa 6-Month Statement PDF, Bank Statement, Salary Payslip, Business Trading License, or Supplier Invoices.
• Upload the file.
• Enter a brief note describing cashflow turnover (e.g., “M-Pesa statement shows steady monthly business turnover averaging KES 95,000”).
• Click Continue.

Figure 4.5: Step 4 Uploading 6-month M-Pesa cashflow statement and turnover documentation.

Step 5: Pledge Collateral Security

• Select existing assets from the borrower’s asset register or click Add New Collateral.
• Record asset details: make, serial/registration number, location, and forced-sale valuation.
• LTV Ratio Check: The system validates that total pledged collateral satisfies the product’s max_ltv_ratio rule (e.g., 120% coverage of principal).
• Click Continue.

Figure 4.6: Step 5 Collateral security pledge with forced-sale valuation and LTV coverage ratio verification.

Step 6: Review, Credit Policy Checks & Submission

• Policy Check Strip: The automated engine evaluates institutional rules:
  • Blacklist Screening: Asserts 0 hits in kyc_blacklist.
  • Tier Ceiling: Asserts principal $\le$ KYC tier ceiling.
  • Maximum Open Exposure: Validates aggregate portfolio exposure limit.
  • Active Delinquency: Asserts client carries 0 overdue days on existing facilities.
• Submission Mode:
  • Submit to Manager: Attaches your Level 1 Loan Officer signature and moves the application to review status on the Branch Manager’s desk.
  • Save as Draft: Keeps the dossier in draft on your desk if awaiting additional supporting documents.
• Click Create & Submit.

Figure 4.7: Step 6 Consolidated policy checks (all green) and final submission to branch manager queue.