When you create a loan with drawings, you can define if the loan includes amortization or not. If the loan includes drawings and amortization, you used to select only a consolidation date.
Now, you must select an end of availability period AND a consolidation start date:
- The end of availability period is the date until which you CAN perform drawings.
- The consolidation start date is the date from which you CAN start amortizing.
The End of Availability Period and Consolidate Start Date Overlap
This transaction starts in 2015 and ends before 2025, with the payment dates annually scheduled. You can perform drawings until 2022 and starts amortizing from 2018, i.e. between 2018 and 2022, you can draw and amortize at the same time.
When a drawing is performed, the amortization immediately starts after that drawing, taking into account the consolidation start date. Here, we draw in 2020, and as the consolidation start date is set in 2018, the amortization starts in 2021.
The End of Availability Period and Consolidate Start Date Do Not Overlap
This transaction starts in 2015 and ends before 2025, with the payment dates annually scheduled. You can perform drawings until 2017 and starts amortizing from 2023, i.e. between 2018 and 2022, you can neither draw nor amortize.
When a drawing is performed, the interest immediately starts after that drawing. However, the amortization can only start from the consolidate date agreed. Here, we draw in 2016 and start paying the interest right after, while the amortization should wait as agreed.
See Create a Standard Loan for more details.