Disbursement

What is Loan Disbursement? 

In the lending domain, disbursement refers to the process when the lender transfers the sanctioned loan amount to the borrower’s bank account. The lender may deposit the amount into the borrower’s bank account in one go or instalments, as agreed upon. 

Some of its features include: 

• It can be either in a lump sum or in pre-decided instalments
• In the business, it is a part of the cash flow to document day-to-day expenses 
• The disbursal time is subject to the type of loan and the time taken for the verification process

Note that some lenders also offer the benefit of same-day disbursal after approving your application, which helps you address urgent needs without any delay. 

How Disbursement Works?

In terms of bookkeeping, disbursement is a process wherein funds get transferred from the company account to the borrower’s account. It can be either in a lump sum or in instalments for an extended tenure. 

What are the Types of Disbursement?

Disbursement has two types:

• Controlled disbursement: When the lender employs a cash flow management service for day-by-day disbursal 
• Delayed disbursement: It is a type of disbursement where the fund transfer is deliberately dragged out because the bank is issuing a physical cheque for a remote location.  

FAQs on the Disbursement Process

What is loan disbursement?

It is the process when the lender transfers the sanctioned loan amount into your account. 

How do I check my loan disbursement?

You’ll get a confirmation letter or email with the details of the transfer. You can also check your account balance to confirm. 

What are some examples of a disbursement?

Here are a few instances of disbursement:

• When an attorney makes payment on behalf of their client
• Lender depositing the funds into the borrower’s account for any loan
• Employees acquire settlement amounts from their employer