diff --git a/erpnext/patches.txt b/erpnext/patches.txt
index ce0e4ac..f3907f4 100644
--- a/erpnext/patches.txt
+++ b/erpnext/patches.txt
@@ -680,3 +680,4 @@
 erpnext.patches.v12_0.update_appointment_reminder_scheduler_entry
 erpnext.patches.v12_0.retain_permission_rules_for_video_doctype
 erpnext.patches.v13_0.patch_to_fix_reverse_linking_in_additional_salary_encashment_and_incentive
+erpnext.patches.v13_0.update_old_loans
diff --git a/erpnext/patches/v13_0/update_old_loans.py b/erpnext/patches/v13_0/update_old_loans.py
new file mode 100644
index 0000000..e924f62
--- /dev/null
+++ b/erpnext/patches/v13_0/update_old_loans.py
@@ -0,0 +1,83 @@
+from __future__ import unicode_literals
+import frappe
+from frappe.utils import nowdate
+from erpnext.accounts.doctype.account.test_account import create_account
+from erpnext.loan_management.doctype.process_loan_interest_accrual.process_loan_interest_accrual import process_loan_interest_accrual_for_term_loans
+from erpnext.loan_management.doctype.loan.loan import make_repayment_entry
+
+def execute():
+
+	# Create a penalty account for loan types
+
+	frappe.reload_doc('loan_management', 'doctype', 'loan_type')
+	frappe.reload_doc('loan_management', 'doctype', 'loan')
+	frappe.reload_doc('loan_management', 'doctype', 'repayment_schedule')
+	frappe.reload_doc('loan_management', 'doctype', 'process_loan_interest_accrual')
+	frappe.reload_doc('loan_management', 'doctype', 'loan_repayment')
+	frappe.reload_doc('loan_management', 'doctype', 'loan_repayment_detail')
+	frappe.reload_doc('loan_management', 'doctype', 'loan_interest_accrual')
+	frappe.reload_doc('accounts', 'doctype', 'gl_entry')
+
+	updated_loan_types = []
+
+	loans = frappe.get_all('Loan', fields=['name', 'loan_type', 'company', 'status', 'mode_of_payment',
+		'applicant_type', 'applicant', 'loan_account', 'payment_account', 'interest_income_account'])
+
+	for loan in loans:
+		# Update details in Loan Types and Loan
+		loan_type_company = frappe.db.get_value('Loan Type', loan.loan_type, 'company')
+
+		parent_income = frappe.get_value('Account', {'company': loan.company,
+			'is_group': 1, 'root_type': 'Income'})
+
+		penalty_account = create_account(company=loan.company, account_type='Income Account',
+			account_name='Penalty Account', parent_account=parent_income)
+
+		if not loan_type_company:
+			loan_type_doc = frappe.get_doc('Loan Type', loan.loan_type)
+			loan_type_doc.is_term_loan = 1
+			loan_type_doc.company = loan.company
+			loan_type_doc.mode_of_payment = loan.mode_of_payment
+			loan_type_doc.payment_account = loan.payment_account
+			loan_type_doc.loan_account = loan.loan_account
+			loan_type_doc.interest_income_account = loan.interest_income_account
+			loan_type_doc.penalty_income_account = penalty_account
+			loan_type_doc.submit()
+			updated_loan_types.append(loan.loan_type)
+
+		if loan.loan_type in updated_loan_types:
+			if loan.status == 'Fully Disbursed':
+				status = 'Disbursed'
+			elif loan.status == 'Repaid/Closed':
+				status = 'Closed'
+			else:
+				status = loan.status
+
+			frappe.db.set_value('Loan', loan.name, {
+				'is_term_loan': 1,
+				'penalty_income_account': penalty_account,
+				'status': status
+			})
+
+			process_loan_interest_accrual_for_term_loans(posting_date=nowdate(), loan_type=loan.loan_type,
+				loan=loan.name)
+
+			payments = frappe.db.sql(''' SELECT j.name, a.debit, a.debit_in_account_currency, j.posting_date
+				FROM `tabJournal Entry` j, `tabJournal Entry Account` a
+				WHERE a.parent = j.name and a.reference_type='Loan' and a.reference_name = %s
+				and account = %s
+			''', (loan.name, loan.loan_account), as_dict=1)
+
+			for payment in payments:
+				repayment_entry = make_repayment_entry(loan.name, loan.loan_applicant_type, loan.applicant,
+					loan.loan_type, loan.company)
+
+				repayment_entry.amount_paid = payment.debit_in_account_currency
+				repayment_entry.posting_date = payment.posting_date
+				repayment_entry.save()
+				repayment_entry.submit()
+
+				jv = frappe.get_doc('Journal Entry', payment.name)
+				jv.flags.ignore_links = True
+				jv.cancel()
+