A Policy in Canopy represents a specific behavior or rule that determines how your lending product operates. Policies define the conditional logic and strategic choices that shape how your lending program behaves throughout the product lifecycle and other portfolio wide events.

Understanding Policies

They represent conditional behaviors that result in true/false outcomes
They offer a predetermined set of options rather than accepting arbitrary values

Policy Levels

Policies in Canopy are clearly scoped to specific entity levels to ensure clear, predictable behavior. The Entity levels they affect are:

Policy Enforcement

Each policy exists at exactly one scope level - there are no overrides or duplication across levels. This clear separation ensures predictable behavior and makes it easier to understand how your lending product will operate.

How are policies applied?

A single policy is no loan program and so policies must be grouped together and applied during loan origination. This grouping of policies in Canopy is referred to as templates.

Line of Credit Policy and Runtime Configuration Reference

This guide outlines all available policy configurations and runtime parameters for setting up a Line of Credit program, with the goal of setting a baseline understanding what can be configured and how each setting impacts product behavior.

1. Lifecycle Policies

Purpose: Define how customer obligations are created, billed, and repaid.

Setting	Available Options / Description
Obligation Strategy	• Credit Card – Revolving structure; customers can draw and repay repeatedly. • Interest-Only – Only interest is paid periodically; principal due at maturity. • Pay in Full – Entire balance must be repaid each cycle. • Bullet Loan – No payments until maturity, when full principal and interest are due.

2. Interest Policies

Purpose: Define how interest is accrued and applied to outstanding balances.

Setting	Available Options / Description
Interest Accrual Strategy	• Credit Card – Interest accrues daily on unpaid balances. • Daily Balance – Interest calculated daily on the current balance. • Fixed Amount – Same interest charge every billing cycle.

3. Fee Policies

Purpose: Define how and when fees are applied.

Late Fees

Setting	Available Options / Description
Late Fee Strategy	• None – No late fees. • Fixed Amount – Flat fee charged when a payment is late. • Percentage of Balance – Fee based on the unpaid balance. • Tiered Amount – Fee amount varies depending on balance tiers.
Late Fee Amount	Flat or base amount of late fee when applicable (e.g., $35).

4. Payment Policies

Purpose: Specify how payments are distributed across different balance components.

Setting	Available Options / Description
Payment Allocation Strategy	• Credit Card Style – Payments apply first to the highest-interest or most expensive balance. • Default – Standard order (fees → interest → principal).

5. Secured Policies

Purpose: Manage collateralized credit lines and enforce loan-to-value (LTV) limits.

Setting	Available Options / Description
Maximum Allowed LTV (%)	The highest ratio of loan balance to collateral value permitted (e.g., 85%).
LTV Warning Threshold (%)	Alert threshold before breaching the maximum allowed LTV (e.g., 80%).
LTV Calculation Method	• Current Balance LTV – Based on outstanding balance and collateral value. • Credit Limit LTV – Based on full credit limit and collateral value.
Restrict Draws on LTV Breach	• Yes – Blocks new draws when LTV exceeds the limit. • No – Allows draws even if LTV is exceeded.

6. Operational Policies

Purpose: Define how operational events such as disputes are handled.

Setting	Available Options / Description
Auto-Issue Provisional Credit During Disputes	• Yes – Automatically restores credit for disputed amounts during investigation. • No – Credit remains reduced until dispute is resolved.

7. Runtime Configuration Parameters

Purpose: Define parameters set when a line of credit is created.
These are runtime-defined, meaning they are applied per account and not embedded in the policy template.

Setting	Description
Line of Credit ID	Unique identifier for the specific line of credit. Auto-generated if not provided.
Template ID	Reference to the policy template that governs this credit line.
Credit Limit	Maximum borrowing amount (e.g., $1,000 = 100,000 cents).
Currency	Currency code (e.g., USD, EUR, GBP). Defaults to USD.
Billing Cycle Interval	Frequency of billing statements (e.g., monthly, weekly).
Payment Due Offset	Time between billing cycle close and payment due date.
Interest Rate (%)	Annual interest rate (whole number, e.g., 5.0 for 5%).
Term Length	Duration for closed-ended credit lines (e.g., 6 months). Leave blank for revolving lines.
Late Fee Grace Period	Time after due date before late fees are charged (e.g., 15 days).
First Billing Cycle Interval	Adjustment period for the first cycle to align future billing dates (optional).
Effective Date	When the line of credit becomes active. Usually system-generated.

In Summary

Policies define the behavioral rules of the credit product (interest, fees, payments, etc.).
- Runtime parameters define the account-level settings (credit limit, term, currency, etc.).
  - Together, they form the complete configuration of a Line of Credit product in production.