Our commercial loan software is set-up to handle commercial shadow loan processing. It can perform dual-accrual accounting by establishing a shadow note. The shadow note may carry the billable interest rate and drive the billings. The loan and the shadow record may be reconciled periodically and at loan maturity. At reconciliation, the differential interest between the loan and the shadow can be capitalized to the loan’s Current Loan Balance.
The system automates advances, billings, and payment application to the shadow loan. Transaction allocations to the shadow note are maintained at a constant ratio, ensuring that no change occurs in the ratio of loan-to-shadow-note balances. Customer billing may occur from either the loan or the shadow loan.
Some examples of how COMMERCIAL Shadow Loan Processing may be used include:
- Cost of Funds Accounting
- Asset Based Non-accruals (Non-Performing Loans)
- Renegotiated Loan (Impaired Loan) Processing
- Service Fees Accounting