A beneficiary refers to a third party whose account a borrower’s loan can be paid into upon the borrower’s request. Beneficiaries can be educational institutions in the case of educational loans or vendors in the case of Buy Now Pay Later (BNPL) loans.
Why beneficiaries matter
Beneficiaries help ensure that loans are used for their intended purposes while giving lenders visibility into disbursement destinations. For example:
- Scenario 1 (Educational Loan): A borrower, Tolu, applies for a ₦500,000 educational loan to pay her school fees. Instead of receiving the funds directly, she requests that the payment go directly to ABC University’s account as the beneficiary.
- Scenario 2 (BNPL Loan): A borrower, Chuka, buys a laptop using a BNPL loan. The lender pays the vendor, TechStore Ltd, directly as the beneficiary, ensuring that the funds are used for the purchase.
Read further: Disbursing loan to a third party
How to create a beneficiary on the Lendsqr admin console
1. Navigate to “Beneficiaries” on the Lendsqr admin console and click on the New Beneficiary button.
2. A modal will appear where you can fill in the bank name and account number of the new beneficiary.
3. The system will automatically verify the bank details to confirm the account name.
4. Proceed to include the email address and phone number of the beneficiary for contact and notification purposes.
5. Click on Save Beneficiary. The beneficiary’s details will now be stored on the beneficiaries page
Read further: Managing beneficiaries details on the admin console
Key benefits of using beneficiaries
- Direct disbursement: Funds reach the intended third party without delays.
- Fraud prevention: Ensures loans are used for approved purposes.
- Clear audit trails: Helps your operations and compliance teams track loan utilization efficiently.
By setting up beneficiaries on Lendsqr, your lending operations remain transparent, organized, and aligned with regulatory best practices.