Loans¶
Last reviewed: 2026-08-12 · Claude (loans-fix session)
Status: Complete
Route: /loans → /loans/new → /loans/:id
Access: Premium and Accountant Pro tiers only (not available on Free) — gated by FeatureGuard feature="loans"
1. What is it?¶
The Loans module lets a business record and track borrowed money — whether from a bank, from the owner/shareholders, from a director, or from a third party. Each loan tracks the principal, interest rate, repayment term, and outstanding balance. Finora calculates interest and records loan payments against the liability. Automatic interest accrual and amortization schedules are not yet built — repayments are recorded manually, one at a time.
2. How does it work in Finora?¶
2.1 The loans list (/loans)¶
Header action: - Add Loan — opens the new loan form
KPI summary cards: | Card | What it shows | |------|--------------| | Total Outstanding | Total principal balance not yet repaid across all active loans | | Bank Loans | Count and total naira value of bank loans | | Owner / Director Loans | Count and total naira value of owner and director loans | | This Month Interest | Interest accrued or due in the current month |
Filters: - Loan Type: Bank Loans / Owner Loans / Director Loans / Third Party - Status: Active / Paid Off
Table columns: - Loan — loan name/reference - Lender — name of the lender - Type — Bank Loan / Owner Loan / Director Loan / Third Party - Principal — original loan amount - Outstanding — remaining balance - Rate — annual interest rate - Status — Active / Paid Off - Actions — Record Payment, View Details
Information panels on the loans list:
Owner / Director Loans: Loans from owners or directors are subject to thin capitalisation rules. Interest-free loans are allowed. If interest is paid on such loans, WHT of 10% applies.
Capital Contributions (not loans): Money invested by owners as equity should be recorded under Capital (
/capital), not as a loan. Capital contributions go to equity account 3025 — Owner's Capital Contribution.
2.2 Adding a new loan¶
Navigate to /loans/new. Sections:
Loan Details: | Field | Required | Notes | |-------|----------|-------| | Loan Type | Yes | Bank Loan / Owner/Shareholder Loan / Director Loan / Third Party Loan | | Lender Name | Yes | e.g., GTBank, First Bank, or the owner's name | | Contact Info | No | Phone, email, or account officer details | | Loan Purpose | No | e.g., Working capital, Equipment purchase, Expansion |
Financial Details: | Field | Required | Notes | |-------|----------|-------| | Principal Amount (₦) | Yes | The total amount borrowed | | Annual Interest Rate (%) | Yes | Enter 0 for interest-free loans — common for owner/director loans | | Rate Type | No | Fixed Rate (default) or Variable Rate | | Loan Term (months) | No | Duration of the loan. Default: 12 months ("Short-term loan") | | Processing Fees (₦) | No | Any upfront fees charged by the lender |
Dates: | Field | Required | Notes | |-------|----------|-------| | Disbursement Date | Yes | Date the funds were received | | Maturity Date | No | Auto-calculated from disbursement date + loan term | | First Payment Date | No | The date the first repayment instalment is due |
Additional Notes — free text for internal reference
Action buttons: - Cancel — returns to the loans list - Create Loan — creates the loan record and posts the acquisition entry to the GL
2.3 GL entries¶
On loan receipt (Create Loan): | Account | Debit | Credit | |---------|-------|--------| | 1020 Cash at Bank | Principal amount | — | | 2030 Loans Payable (or relevant liability account) | — | Principal amount |
The loan appears as a liability on the Balance Sheet (Loans Payable). The cash received increases the bank account.
On interest payment: | Account | Debit | Credit | |---------|-------|--------| | 6xxx Interest Expense | Interest amount | — | | 1020 Cash at Bank | — | Interest amount |
On principal repayment: | Account | Debit | Credit | |---------|-------|--------| | 2030 Loans Payable | Repayment amount | — | | 1020 Cash at Bank | — | Repayment amount |
Processing fees at loan inception are typically expensed to an interest/finance charges account or capitalised over the loan life depending on accounting policy.
2.4 Loan types — key differences¶
| Type | Notes |
|---|---|
| Bank Loan | Formal commercial credit from a licensed bank. Market interest rate, processing fees common. WHT on interest typically deducted by the bank at source |
| Owner/Shareholder Loan | Funds provided by the business owner(s). Can be 0% interest. Subject to thin capitalisation rules. If interest is paid, WHT 10% applies |
| Director Loan | Funds provided by a company director. Same thin cap and WHT rules as owner/shareholder loans |
| Third Party Loan | Loans from non-bank, non-related parties (e.g. microfinance institution, cooperative, private lender) |
3. Business rules & constraints¶
| Rule | Detail |
|---|---|
| No automatic interest accrual | Amortization schedules are not yet built — repayments are recorded manually, one at a time |
| 0% interest is valid | Owner and director loans at 0% are common and supported — enter 0 in the interest rate field |
| Equity contributions are NOT loans | Money the owner puts in as equity must go under Capital (/capital), not Loans |
| WHT on interest to related parties | If the business pays interest to an owner or director, WHT of 10% must be deducted and remitted to FIRS |
| Maturity date auto-calculated | Maturity = Disbursement Date + Loan Term (months) |
| Outstanding balance tracked per payment | Each recorded payment reduces the Outstanding balance shown on the list |
4. Nigerian regulatory context¶
Thin Capitalisation Rules (Companies Income Tax Act) - FIRS limits the amount of related-party debt a Nigerian company can deduct interest on - The thin cap rule caps deductible interest on related-party loans based on the permitted debt-to-equity ratio (historically 2:1 under Nigerian CIT regulations) - Interest on loans from connected parties (owners, directors, shareholders) that exceeds the permitted ratio is not deductible for CIT purposes - Businesses with significant owner/director loans should monitor their debt-to-equity ratio
WHT on Interest - Interest paid to a Nigerian company on a loan: WHT 10% - Interest paid to an individual lender: WHT 10% - The paying business deducts WHT and remits to FIRS; the lender receives a WHT certificate to offset against their own tax liability - For bank loans, banks typically deduct WHT from interest income before disbursing net interest to borrowers
CIT Deductibility of Interest - Interest on genuine third-party commercial loans (banks, microfinance) is generally deductible as a business expense for CIT - Interest on related-party loans is deductible only up to the thin cap limit - Interest-free related-party loans have no WHT implications since no interest is paid
Loan vs Equity — CAC Implications - Shareholders' loans are liabilities, not equity — they do not increase paid-up share capital - For CAC (Corporate Affairs Commission) filings, the distinction between paid-up share capital and shareholder loans is important - Advise businesses to maintain clear records distinguishing equity investment from debt lending
5. Common customer questions¶
Q: "What's the difference between a Loan and a Capital Contribution?"
A Loan is borrowed money the business must repay — it's a liability on the Balance Sheet. A Capital Contribution is equity the owner puts in permanently — it's not repaid and goes to the owner's equity section. Use Loans for money that will be paid back; use Capital (
/capital) for owner equity injections.
Q: "Can I record a 0% loan from myself to my company?"
Yes. Owner and director loans at 0% are common and fully supported. Enter 0 in the Annual Interest Rate field. No interest expense or WHT applies on a 0% loan.
Q: "My bank deducted WHT from my loan interest. How do I record this?"
Record the gross interest amount as the interest payment. The WHT deducted by the bank is a WHT receivable (the business can use the WHT certificate to offset tax). Escalate to Tier 2 for guidance on the specific GL entries.
Q: "The amortization schedule isn't showing. When will that be available?"
Amortization schedules are not yet built. Currently, repayments can be recorded manually one at a time. Escalate to Tier 2 for any workaround guidance in the interim.
Q: "I have a loan from a shareholder. Is it taxable income?"
The loan itself is not taxable income — it's a liability to be repaid. However, if the business pays interest on the shareholder loan, that interest is subject to WHT at 10%. If no interest is paid (0% loan), there is no WHT obligation.
6. Known edge cases¶
Automatic interest accrual not yet live¶
Businesses expecting the system to automatically post monthly interest charges will find this does not happen yet. Manual interest payment entries are the current path.
Owner equity vs shareholder loan confusion¶
Owners often conflate money they have "put into" the business with loans. If funds were meant to be equity, they must go under Capital (/capital) — recording them as a Loan creates an artificial liability that overstates debt and distorts thin cap analysis.
Variable rate loans¶
The Rate Type field allows "Variable Rate" but the system's calculation logic for rate changes on variable loans is not fully documented. Manual rate updates may be required when the interest rate changes.
Processing fees GL treatment¶
Processing fees are recorded at the form level but their GL treatment (expensed immediately vs amortised over the loan life) may not be fully automated. Escalate to Tier 3 if a business queries where processing fees are posting.
Multi-currency loans¶
Finora operates in Naira. Foreign currency loans (USD, GBP) must be entered at the naira equivalent on the disbursement date. FX translation gains/losses on outstanding foreign currency loan balances are not handled.
7. Escalation trigger¶
Escalate to Tier 3 (Founder) if: - GL entry on loan creation is posting to incorrect accounts - Recorded loan repayments are not reducing the Outstanding balance - Processing fees are not posting to the correct expense account - A loan record needs to be deleted or reversed after creation
Escalate to Tier 2 (Support Lead) if: - Business needs guidance on thin capitalisation rules and CIT deductibility - Business wants an amortization schedule before that feature is built - Business is confused about Loan vs Capital Contribution treatment - WHT on interest to owners/directors needs to be set up and filed via WHT Returns
8. Last reviewed¶
2026-08-12 — loans-fix session. Beta banner removed from /loans (module graduated out of Beta — status now Complete). Two production bugs fixed in the same session: (1) owner/director loans and interest-bearing loans were failing GL posting with "Required accounts not found" because several loan-role accounts (2031, 2101, 6075, 6076, 6077) are not seeded by the standard COA template for any business — GL posting now auto-provisions the missing account instead of failing, except on a custom chart (e.g. Dataflex), which still fails loudly rather than guessing; (2) the REST API's repayment endpoint only appended to a summary array and never posted to the GL — it now writes a canonical loan_payments document so the GL trigger fires, and accepts both /repayments and the mobile app's singular /repayment path. A ₦10,000,000,000 cap was also added on loan principal and repayment amounts (client + server) after a ₦500-trillion-scale loan was found in production with no upper bound anywhere in the stack.
2026-03-31 — Nnamdi. Verified against production. Loans list confirmed (empty — no loans in test business); Beta notice visible. Add New Loan form fully captured: Loan Types (Bank Loan / Owner-Shareholder Loan / Director Loan / Third Party Loan), Financial Details (Principal, Annual Interest Rate with 0% guidance, Fixed/Variable Rate Type, Loan Term default 12 months, Processing Fees), Dates (Disbursement, Maturity auto-calculated, First Payment Date), Notes. Info panels on loans list documented: Owner/Director Loan thin cap rules + WHT 10%; Capital Contributions redirected to /capital.