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    Advancing and recovering loans to third parties

    This article explains how to record loans extended from the trust to a third party (such as a trust beneficiary), as well as the third party’s repayments of those loans.

    To record the receipt and repayment of mortgages or other loans to the trust from third parties that require to be repaid, read our article here. To record debt or loans from other, non-bank sources, which can be forgiven or gifted, read the article here.

    Contents

    1. Recording a loan advance

    2. Recording loan repayments


    Recording a loan advance 

    To record the loan advance, navigate to the trust’s ledger and either:

    1. Click on the “I would like to…” drop-down menu and select Advance loan. 

    OR

    2. If the loan is an addition to an existing advance, open Accounts>Chart of Accounts section, place a tick next to the loan account you want to advance to and then click on the advance button on the slide-out menu.

    3. In the form that opens, record:

    • The party receiving the loan. You may either select an existing advance account or create a new account to record the advance against. 
    • The amount being loaned. This will be debited as a change in the balance of the account receiving the loan. 
    •  The date the loan was advanced. 

    4. You can then record where the loaned funds came from. Again, either select an existing account or create a new account. The amount of the loan will then be debited against this account, to balance the amount credited against the account receiving the loan.

    If you choose not to allocate the source of the loan into an account, the unallocated amount will automatically be balanced against the trust's Suspense account and can be reconciled later. For more on using and reconciling the suspense account, see the article here.

    5. Add any supporting notes, then select Create in the top right to save the loan advance. 

     

    Recording loan repayments  

    To record repayments of a loan, navigate to the trust's Ledger tab and either:

    1. Click on the “I would like to…” drop-down menu and select Recover loan. 

    OR

    2. Open the Accounts>Chart of Accounts section, place a tick next to the loan account you want to recover, and then click on the recover button on the slide-out menu.

    3. In the form that opens record:

    •  The loan advance account being repaid 
    •  The date the repayment was made 
    •  The amount being repaid 

    4. You can then record where the repaid funds went to. Again, either select an existing account or create a new account. The amount of the repayment will then be credited against this account, to balance the amount debited from the loan account.

    If you choose not to allocate the source of the repayment into an account, the unallocated amount will automatically be balanced against the trust's Suspense account and can be reconciled later. For more on using and reconciling the suspense account, see the article here. 

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