We are a small company.
I just wanted to know if any employee wants any loan from the company, how we will proceed that?
What are the formalities are there?
Is there any legal procedure to give loan to employees? If so, what are those?
What documents are required to be prepared and by whom?
Kindly let me know all the in and outs for paying loan to employees.
Thanks in Advance.
Soma Saha (Human Resource)
You should have an Employee Loan & Advance Policy which defines which employees are eligible to take loan, what is the maximum amount, what is the repayment period and reasons for which loan will be provided.
Employee needs to send the requisition of Loan in Loan Application Form and his Department head should approve that. Then HR should verify the details and give to Finance Controller for approval & disbursement.
- Loan should be given to confirmed employees only. Probationers should not be given
- Reason of Loan: Education, Medical, Marriage, Relocation as per business requirement
- Should be recovered in maximum 6 equal monthly instalments from the salary of the employees.
- Max Loan amount should not be more than 2 months Gross Salary
You can get an application from the employee mentioning ways to remit it back, keep it in records and proceed.