Create a Subsidy Loan

A subsidy loan is a debt transaction subscribed by an entity with one counterparty (internal or external, the lender) at a given interest rate. Its details include: the principal amount, the interest rate, the repayment date, etc.

Subsidy loans have one initial drawing, equal to the loan principal, an interest payment schedule and an amortization schedule. The related periods, payment dates, interest calculations and amortization modes can be very simple or sophisticated. Subsidy loans can be associated with a subsidy table, which includes details on how the interest paid can be subsidized.

Navigate to the Debt & Derivatives Application
  1. Log in to your Fairways Debt account, e.g. https://login.financeactive.com/login.
  2. Select a customer account.
  3. Navigate to Applications Applications.png > Debt & Derivatives.
Create a Subsidy Loan
  1. Click Add Transaction > Loan > Subsidy Loan.

DebtDerivatives_Portfolio_Loan_Subsidy_EN.png

  1. Complete the form with all relevant details.

Note: Fields marked with an asterisk * are mandatory.

Field Description
Reference Code Unique reference of the transaction. Identifies the transaction in the portfolio. The reference must be unique among all the entities managed in the account.
External Reference Code Used by external systems to identify the transaction. Used when transactions are imported from or exported to another system.
Principal Principal amount of the loan.
Currency Currency of the principal amount.
Borrower Borrowing entity in the system. Only entities in the current organization can be managed by the current user.
Lender Can be either internal (an entity in the system) or external (a commercial bank).
Subsidy Table Calculation defining the amount paid by the borrower and the amount paid by a third party at each interest payment.
Activation Date

Activation date of the subsidy, if different from the start date of the loan.

DebtDerivatives_Loan_Subsidy_Create_Transaction_EN.png

Field Description
Trade Date Date at which the transaction has been traded. From that date, the system takes the transaction into account as an item of the portfolio.
Start Date Unadjusted start date of the transaction.
End Date Unadjusted end date of the transaction.
First Roll Date Unadjusted date of the first payment (useful when the first period is a long or short stub).

DebtDerivatives_Transaction_Loan_Standard_Date_EN.png

Field Description
Amortization Type Amortization mode.

DebtDerivatives_Transaction_Loan_Standard_Amortization_EN.png

Field Description
Index Name of the index used to calculate the rate value, e.g. FIXED for fixed rate.
Interest Rate Fixed rate value in percentage.
Initial Interest Rate Initial rate of the custom index.
Spread Spread (or margin) value in percentage.
Day Count Convention Used to compute the day fraction of an interest accrual period.
Capitalized Interest Defines whether the interest amount should be paid at the payment date, or added to the principal (and included into the outstanding balance for the following periods).

DebtDerivatives_Loan_Subsidy_Create_Indexation_EN.png

Field Description
Frequency Frequency of the payments.
Adjustment Adjustment mode for the interest calculation. The nominal start and end dates of the accrual period will be adjusted accordingly before computing the interest amount.
Payment Date Adjustment Adjustment mode for the payment date.
Last Stub Period Defines whether the last period should be a short or long stub when it does not match the selected frequency. Short End Stub by default.

DebtDerivatives_Transaction_Loan_Standard_Payment_EN.png

  1. Enable Show Details after Validation to automatically open the new subsidy loan profile once created.
  2. Click OK to create the subsidy loan.

The new subsidy loan displays in the draft portfolio.

DebtDerivatives_Loan_Subsidy_Created_EN.png

Adjustment

Adjustment modes define how the system rolls dates in case of holidays in the calendar.

Field Description
Unadjusted Not rolled.
Preceding Rolled to the previous business day.
Following Rolled to the next business day.
Modified Preceding Rolled to the previous business day, only if that day occurs in the same month. Otherwise, rolled to the next business day.
Modified Following Rolled to the next business day, only if that day occurs in the same month. Otherwise, rolled to the previous business day.
End of Month (unadjusted) Rolled to the last day of the month.
End of Month (preceding) Rolled to the last day of the month, then adjusted to the previous business day.
Modified Following (year)

Rolled to the next business day, only if that day occurs in the same year. Otherwise, rolled to the previous business day.

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