How to Enable or Disable Employee Loans in FuseOffice HRM

To begin, navigate to:
Payroll > Settings > General Settings

Then switch to the Loans tab.

This page allows you to control how employee loans are requested, calculated, and repaid through payroll.

1. Enable Employee Loans

Toggle Enable Loans ON or OFF.

  • When ON, employees can request loans from their self-service portal.

  • When OFF, employees will not see any loan options.

2. Processing Fee (%)

This is an extra charge added to a loan when it is approved.

  • Enter the fee as a percentage (e.g., 2%).

  • Example: A 2% fee on a K5,000 loan adds K100 to the total loan amount.

This fee typically covers administrative handling of the loan.

3. Processing Cap

This sets the maximum amount of processing fee that can be charged, regardless of percentage.

  • Example: If the processing fee is 2% and the cap is K150:

    • A K5,000 loan → 2% = K100 → allowed

    • A K20,000 loan → 2% = K400 → capped at K150

This prevents very large loans from attracting excessively high fees.

4. Interest Rate (%)

Enter the interest percentage that will be applied to the loan.

Interest Frequency (Day, Week, Month, Year, or Per Loan)

This defines how often interest is applied.

Examples:

  • Per Month: Interest is added once every month.

  • Per Week: Interest is added every week.

  • Per Day: Interest is calculated daily.

  • Per Year: Annual interest rate.

  • Per Loan: A one-time interest calculation for the entire loan period.

This makes FuseOffice flexible for different organisational loan policies.

5. Interest Method

Choose how interest should be calculated on the loan:

Reducing Balance

  • Interest is applied on the remaining loan balance after each repayment.

  • As the employee repays the loan, the interest amount reduces.

  • This is the fairest and most commonly used method.

Flat

  • Interest is calculated once on the full loan amount and does not change.

  • Each repayment contains the same interest amount.

  • Simpler but more expensive for the employee.

6. Salary Ratio (B&I Ratio)

This setting limits the maximum loan amount an employee can request.

  • Based on their Basic Salary + Income (B&I).

  • Example: If the ratio is 40% and the employee earns K10,000, their loan limit is K4,000.

This ensures employees do not borrow more than they can repay.

Save the Configuration

Click Save to apply your loan rules.

All future loan requests, approvals, and payroll deductions will use these settings.

How Loan Rules Work in Payroll

Automatic Repayments

Each payroll run deducts:

  • Principal

  • Interest (based on method + frequency)

  • Processing fee (if applicable)

Accurate Calculations

FuseOffice ensures:

  • Payroll applies the correct amount

  • Balances decrease correctly

  • Interest follows the frequency and method selected

Employee Visibility

Employees see:

  • Eligible loan limits

  • Total repayment amount

  • Repayment schedule

  • Remaining balance over time