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Loan rescheduling vs loan top-up: what is the difference?

Both change a running loan, but they solve opposite problems: rescheduling helps a member who cannot pay; a top-up lends more to a member who can.

By the SaccoMonitor team · Updated · 7 min read

Side by side

ReschedulingTop-up
For whomA borrower struggling to repayA borrower in good standing who needs more
What changesThe remaining schedule: term, rate, frequencyThe old loan is cleared; a new, bigger loan starts
Money paid outNoneNew loan amount minus fees minus the payoff
ApprovalBy someone permitted to restructure, with a reasonNormal loan appraisal and approval levels
ArrearsCapitalised into the balance or waivedPaid off as part of the payoff

Rescheduling: a worked example

A loan has UGX 800,000 of principal left, UGX 48,000 of overdue interest and UGX 12,000 of penalties.

ChoiceNew balanceAccounting
Capitalise arrears860,000Dr Loans receivable 60,000 · Cr Interest income 48,000 · Cr Penalty income 12,000
Waive arrears800,000No entry: interest and penalties are recognised only when collected, so there is nothing to reverse

Either way, installments already paid stay as history and the new schedule starts from the effective date. Interest on installments that were not yet due is dropped — the new schedule charges interest on the new balance instead.

Top-up: a worked example

A member owes UGX 600,000 principal plus UGX 12,000 interest already due on a running loan, and is approved for a UGX 2,000,000 top-up with a 1% processing fee.

ItemAmount (UGX)
New loan2,000,000
Processing fee (1%)− 20,000
Payoff of the old loan (600,000 + 12,000)− 612,000
Paid to the member1,368,000

The old loan closes as “topped up”. Interest on its future instalments is not charged, because that money was never lent for that time.

Good practice

  • Write the reason and the approval reference on every restructure.
  • Track restructured loans separately in portfolio reports — repeated rescheduling hides risk.
  • Do not top up a loan that is in arrears; reschedule or recover first.

Frequently asked questions

Rescheduling (restructuring) replaces a loan’s remaining repayment schedule with a new one — usually a longer term or lower instalment — for a borrower who cannot keep up. Overdue interest and penalties are either added to the balance (capitalised) or forgiven.

A top-up is a new, larger loan whose proceeds first pay off the borrower’s current loan; the borrower receives the difference. It goes through normal appraisal and approval.

The new schedule starts current, but the loan should still be monitored as restructured. Capitalised arrears remain owed as part of the new balance; waived arrears are forgiven.

Related pages

Loan management in SaccoMonitor

Reschedule and top up with a full audit trail.

Complete guide to SACCO loans

From products to write-offs.

Double-entry for SACCOs

The journals behind loans.

See it working in SaccoMonitor

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