Federal Government Direct Loans Subject to Credit Reform

110.FFM.L2.01 Federal Government Direct Loans Subject to Credit Reform
End-to-End Business Process: 110 Apply-to-Repay
Business Scenario(s) Covered
  • Disbursement of a Loan
  • Establishment of Principal Receivable
  • Interest Accrual
  • Collection of Interest and Principal
Business Actor(s)
Finance Office, Federal Agency Lender; Non-Federal Borrower (e.g., a small business)
Synopsis
A Federal Agency Lender makes an unsecured direct loan to a Non-Federal Borrower. The Federal Agency Lender disburses the loan, accrues interest and collects principal and interest from the Non-Federal Borrower. The Federal Agency Lender provides loan-related information and reports and issues the Non-Federal Borrower a Form 1098 for the amount of interest paid on the loan, if applicable.
Assumptions and Dependencies
  1. There may or may not be automated (near/real-time or batch) interfaces between service areas/functions/activities or between provider solutions/systems.
  2. There is no presumption as to which activities are executed by which actor, or which activities are automated, semi-automated, or manual.
  3. Supporting information for general ledger transactions includes sub-ledger entries when sub-ledgers are used.
  4. Appropriate attributes (e.g., object class and project) are included as part of the accounting string.
  5. Relationships between use cases are described in the Framework for Federal Financial Management Use Cases found in the related overview document.
  6. All predecessor activities required to trigger the Initiating Event have been completed.
  7. Funds availability checks are performed against appropriations/fund accounts for obligating funds, and against obligations for disbursing funds in accordance with OMB A-11, Section 150.2.
  8. The loan approval and loan documentation contain the terms and conditions of the principal, interest, and administrative fees.
  9. The borrower has already been set up in the FM system.
  10. The loan transactions are provided to the FM System on a per loan basis.
  11. The borrower's loan repayments are processed through a Treasury central service (e.g., lockbox or online payment system).
  12. The loan is subject to the Federal Credit Reform Act.
  13. The federal agency has received borrowing authority to cover the loan.
  14. The federal agency has already calculated loan value, subsidy cost and administrative expense.
  15. The federal agency has received appropriated funds for initial subsidy cost and administrative expense.
  16. The periodic subsidy re-estimate activity and FM impacts are performed by a different business process.
  17. The federal agency has already borrowed the necessary funding from Treasury or Federal Financing Bank.
  18. The federal agency has already obligated the funds for the loan program including the obligation for the subsidy expense.
  19. Money borrowed to cover the loan and the subsidy expense are already in the financing account.
FFMSR ID Reference(s) 1.1.2; 1.1.3; 1.1.4; 1.1.5; 2.1.1; 2.1.2; 2.2.1; 2.2.2; 2.2.4; 2.2.5; 2.2.6
Initiating Event

A Federal Agency Lender disburses a direct loan to a Non-Federal Borrower.


USE CASE 110.FFM.L2.01 FEDERAL GOVERNMENT DIRECT LOANS SUBJECT TO CREDIT REFORM
Typical Flow of Events
FFM Event Non-FFM Event Input(s) Output(s) / Outcome(s)
1
  1. Execute loan documents and calculate the loan disbursement amount
  2. Request funds availability check (LNM.020.030 Loan Closing)
  • Approved and validated loan application
  • Loan disbursement information, outstanding principal balance and repayment terms
  • Calculated loan disbursement amount
  • Request for funds availability check
2

Receive and process request for funds availability check (FFM.010.020 Funds Allocation and Control)

  • Request for funds availability check
  • Funds availability response
3
  1. Approve loan
  2. Request disbursement (LNM.020.030 Loan Closing)
  • Funds availability response
  • Validated loan application
  • Request for disbursement
4
  1. Receive and process loan payment request (FFM.030.090 Payment Processing - Loan Payments)
  2. Liquidate obligation (FFM.030.020 Obligation Management)
  3. Initiate payment (FFM.030.090 Payment Processing - Loan Payments)
  4. Generate disbursement schedule (FFM.030.110 Payment Disbursement)
  5. Certify payment of disbursement schedule (FFM.030.110 Payment Disbursement)
  6. Receive confirmation of disbursement (FFM.030.120 Payment Confirmation)
  • Request for disbursement
  • Appropriate obligation liquidation entry created with reference to source information
  • Appropriate disbursement-in-transit entry created with reference to source information
  • Certified disbursement schedule
  • Disbursement confirmation information
  • Appropriate disbursement-in-transit entry liquidated with reference to source information
  • Appropriate disbursement entry created with reference to source information
  • Borrower receives payment
5

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)

  • GL entries
  • Appropriate GL accounts updated
6
  1. Request recording of loan asset information
  2. Request recurring entry for principle and interest receivables (LNM.020.030 Loan Closing)
  • Loan amortization schedule
  • Request for recording of loan asset
  • Request for principle and interest receivable recurring entry
7
  1. Receive and process request for recording of loan asset information (FFM.020.020 Financial Asset Information Processing - Loans)
  2. Receive and process request for recurring entry to invoice principle and interest payments (FFM.060.020 Public Receivable Set-up and Invoicing)
  3. Issue invoice for loan payment (FFM.060.020 Public Receivable Set-up and Invoicing)
  4. Accrue interest (FFM.090.030 Accrual and Liability Processing)
  • Request for recording of loan asset
  • Request for principle and interest receivable recurring entry
  • Loan amortization schedule
  • Appropriate loan asset entry created with reference to source information
  • Appropriate receivable entries created with reference to source information
  • Appropriate interest accrual entry with reference to source information
8

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)

  • GL entries
  • Appropriate GL accounts updated
9
  1. Receive loan payment
  2. Request processing of loan payment (LNM.030.010 Loan Servicing)
  • Loan payment information
  • Request for processing of loan payment
10
  1. Receive and process loan collection (FFM.060.020 Public Receivable Set-up and Invoicing
  2. Recognize revenue for interest payments, as earned (FFM.040.010 Revenue Processing)
  3. Liquidate interest liability accrual (FFM.040.010 Revenue Processing)
  • Request for processing of loan collection information
  • Loan collection information
  • Appropriate receivable entry liquidated with reference to source information
  • Appropriate revenue entry created with reference to source information
  • Appropriate liability accrual reversal entry created with reference to source information
11

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)

  • GL entries
  • Appropriate GL accounts updated
12

Generate report of loan collections (FFM.060.050 Public Receivable and Collection Reporting)

  • Loan collection information
  • Reports on loan collection including Form 1098

This page was last updated on September 13, 2021.