diff --git a/src/masternodes/tokens.cpp b/src/masternodes/tokens.cpp
index 2c6364659d6..bb927ffb579 100644
--- a/src/masternodes/tokens.cpp
+++ b/src/masternodes/tokens.cpp
@@ -135,7 +135,7 @@ Res CTokensView::RevertCreateToken(const uint256 & txid)
     return Res::Ok();
 }
 
-Res CTokensView::UpdateToken(const CTokenImpl& newToken, bool isPreBayfront, const bool skipNameValidation)
+Res CTokensView::UpdateToken(const CTokenImpl& newToken, bool isPreBayfront, const bool tokenSplitUpdate)
 {
     auto pair = GetTokenByCreationTx(newToken.creationTx);
     if (!pair) {
@@ -152,7 +152,7 @@ Res CTokensView::UpdateToken(const CTokenImpl& newToken, bool isPreBayfront, con
     oldToken.name = newToken.name;
 
     // check new symbol correctness
-    if (!skipNameValidation) {
+    if (!tokenSplitUpdate) {
         auto checkSymbolRes = newToken.IsValidSymbol();
         if (!checkSymbolRes.ok) {
             return checkSymbolRes;
@@ -186,6 +186,9 @@ Res CTokensView::UpdateToken(const CTokenImpl& newToken, bool isPreBayfront, con
     if (!oldToken.IsFinalized() && newToken.IsFinalized()) // IsFinalized() itself was checked upthere (with Err)
         oldToken.flags |= (uint8_t)CToken::TokenFlags::Finalized;
 
+    if (tokenSplitUpdate && oldToken.IsLoanToken() != newToken.IsLoanToken())
+        oldToken.flags ^= (uint8_t)CToken::TokenFlags::LoanToken;
+
     if (oldToken.destructionHeight != newToken.destructionHeight) {
         oldToken.destructionHeight = newToken.destructionHeight;
     }
diff --git a/src/masternodes/tokens.h b/src/masternodes/tokens.h
index 5416b320e6a..d75c53af74a 100644
--- a/src/masternodes/tokens.h
+++ b/src/masternodes/tokens.h
@@ -151,7 +151,7 @@ class CTokensView : public virtual CStorageView
     Res CreateDFIToken();
     ResVal<DCT_ID> CreateToken(CTokenImpl const & token, bool isPreBayfront = false);
     Res RevertCreateToken(uint256 const & txid);
-    Res UpdateToken(CTokenImpl const & newToken, bool isPreBayfront = false, const bool skipNameValidation = false);
+    Res UpdateToken(CTokenImpl const & newToken, bool isPreBayfront = false, const bool tokenSplitUpdatea = false);
 
     Res BayfrontFlagsCleanup();
     Res AddMintedTokens(DCT_ID const & id, CAmount const & amount);
diff --git a/src/validation.cpp b/src/validation.cpp
index 2de0769a5a0..40aa9a8ab9e 100644
--- a/src/validation.cpp
+++ b/src/validation.cpp
@@ -4141,7 +4141,7 @@ void CChainState::ProcessTokenSplits(const CBlock& block, const CBlockIndex* pin
         token->symbol += newTokenSuffix;
         token->destructionHeight = pindex->nHeight;
         token->destructionTx = pindex->GetBlockHash();
-        token->flags &= ~static_cast<uint8_t>(CToken::TokenFlags::Default);
+        token->flags &= ~(static_cast<uint8_t>(CToken::TokenFlags::Default) | static_cast<uint8_t>(CToken::TokenFlags::LoanToken));
         token->flags |= static_cast<uint8_t>(CToken::TokenFlags::Finalized);
 
         res = view.SubMintedTokens(oldTokenId, token->minted);
diff --git a/test/functional/feature_token_split.py b/test/functional/feature_token_split.py
old mode 100644
new mode 100755
index 4bf5a7e26cd..2e3c1acf58e
--- a/test/functional/feature_token_split.py
+++ b/test/functional/feature_token_split.py
@@ -249,6 +249,7 @@ def check_token_split(self, token_id, token_symbol, token_suffix, multiplier, mi
         assert_equal(result['mintable'], False)
         assert_equal(result['tradeable'], False)
         assert_equal(result['finalized'], True)
+        assert_equal(result['isLoanToken'], False)
         assert_equal(result['destructionTx'], self.nodes[0].getbestblockhash())
         assert_equal(result['destructionHeight'], self.nodes[0].getblockcount())
 
@@ -287,6 +288,7 @@ def check_token_split(self, token_id, token_symbol, token_suffix, multiplier, mi
         assert_equal(result['mintable'], True)
         assert_equal(result['tradeable'], True)
         assert_equal(result['finalized'], False)
+        assert_equal(result['isLoanToken'], True)
         assert_equal(result['creationTx'], self.nodes[0].getblock(self.nodes[0].getbestblockhash())['tx'][1])
         assert_equal(result['creationHeight'], self.nodes[0].getblockcount())
         assert_equal(result['destructionTx'], '0000000000000000000000000000000000000000000000000000000000000000')