We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Are Loan Proceeds?

Mary McMahon
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Loan proceeds are funds disbursed by a lender, less any origination and processing fees. These funds may be sent directly to the borrower or to an authorized third party who takes custody of the money and applies it to expenses. Borrowers, under the terms of the loan agreement, must repay the loan on the schedule discussed, such as 30 years for a mortgage. They may be eligible for benefits like subsidized interest or early repayment with no penalties, depending on the type of loan.

In an example, a student might apply for a loan of $10,000 United States Dollars (USD) to fund college expenses. The lender could approve the loan, with a 2% fee for origination and processing to disburse the funds and handle the loan. A disbursement would include loan proceeds of $9,800 USD, reflecting the subtraction from the original amount to cover the fees. Proceeds might be directed to the financial aid office, which would use the funds to pay tuition, fees, and related expenses. Any extra could be sent to the student.

Contracts for loans should discuss any fees and expenses associated with the loan origination, and will provide information about the actual loan proceeds. There may also be limitations on how the borrower can use the funds, especially if the loan is provided, backed, or subsidized by the government. Borrowers may be restricted from some uses of small business loans, for example, or could be asked to use government student loans for school-related expenses specifically. Thus, they could use money to buy textbooks, but not books to read for pleasure.

Recipients of loans can choose to cancel them before they are disbursed if they find they no longer need them or have another source of funding. Once the loan proceeds are sent out, the borrower becomes liable for the amount of the loan, and the fees cannot be refunded. This is important to consider, for borrowers thinking about whether they really need a loan. If they wait too long to cancel, they might need to repay origination and processing fees.

Time to disbursement can depend on the loan and the terms. The contract may discuss when the loan proceeds should arrive, and borrowers should be aware it may take several days for them to clear a bank account and become available for use. For students, emergency loans may be available to provide a small amount of funds that cover an immediate need while waiting for a disbursement of student aid.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.