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Savings and Loans
Three types of loans are currently offered
through the program, while voluntary savings accounts are available for
clients of Type 1 and Type 3 loans.
TYPE 1 LOANS
Olivia is a subsistence farmer with
several milk cows. With a loan of $100, she is able to purchase a
bicycle, tripling the amount of milk she is able to transport and sell,
and medicine to improve her cows' health and production.
Value: $50-500
Repayment interval: Biweekly installments,
spread over 18-50 weeks.
Goal: To support women with business skills.
Conditions: Type 1 clients receive
training and advisory services for their businesses. If their loan
applications are approved, they organize five-person groups
(homogeneous in terms of age, geography and socio-economic status, but
representing a diversity of business types). The group is given a loan and then monitored until all repayments
have been made, after which, they become eligible for a new set of
larger loans.
TYPE 2 LOANS
Patrice has surplus maize that he would
like to transport to the city in order to sell for a higher price than
the local market. With a loan of $30, he is able to rent a pick-up truck
with several other farmers, bring his maize to the city and return the
next day with his profits to pay back the loan.
Average value: up to $50
Repayment interval: One time, in full, after no
longer than three months.
Goal: To provide 'fast cash' for
short-term needs/emergencies.
Conditions: Type 2 clients must
attend at least one MESO training course ("Introduction to
Microfinance Services") in order to apply for a loan. Loan applications
are processed in one hour or less; collateral is required.
Interest increases each week that the loan is outstanding, and the loan
must be repaid in full within three months.
TYPE 3 LOANS
Juma, Elizabeth and Petro run a small
health clinic in their village. By combining some of their own money
with a loan of $500, they are able to purchase a machine that tests
blood samples for malaria.
Value: $200-1000
Repayment interval: Monthly installments, spread
over three months to one year.
Goal: To support group-run
businesses that provide some form of community service.
Conditions: The business owner must
attend at least one MESO training course ("Introduction to
Microfinance Services") in order to apply for a loan for his/her
business. S/he must demonstrate that the business has a record of
profitability and, specifically, how the loan will be used to improve a
needed community service. Loan applications are processed in three
business days or less; collateral is required. The business is monitored
until all repayments have been made, after which, it becomes eligible
for larger loans.
VOLUNTARY SAVINGS
Clients of Type 1 and Type 3 loans are
encouraged to maintain savings accounts with MESO (Type 2 clients
are ineligible for savings accounts because of the short-term nature of
their loans). There is no service charge to open an account nor
to make transactions. Several conditions exist:
1. Type 1 clients must open a group
account; all deposits are made under the group's name.
2. Only 50% of the account balance may be
withdrawn in a single day, unless the withdrawal is being used towards a
loan repayment.
3. A Type 1 client may only withdraw money
when accompanied by one or more of her group members (to prevent secret
withdrawals).
4. The account balance may not exceed the client's outstanding loan balance.
5. The account closes when the loan has
been completely repaid, unless the client is applying for a new loan.
For more
information, read our...
You can also
forward any questions or comments to
micro.meso@gmail.com
MESO - The Multi-Environmental Society
mesotz@hotmail.com (C) Copyright 2004 |
FAQ:
frequently asked questions
Why are
your interest rates so high?
Microfinance is designed
to be self-sustaining - it is not charitable. Thus, interest
rates must be relatively high in order to cover program
costs, provide effective service to clients and allow for
gradual expansion to new areas.
What factors determine
whether applicants are credit-worthy?
Although there is no
formula for determining whether a client is credit-worthy or
not, the loan committee considers clients' honesty, business
experience, work ethic and living situation as the primary
factors. The loan committee is comprised of village
residents who have firsthand knowledge of clients'
histories.
Can a client ever have
more than one loan at the same time?
Type 2 loans may be granted, in some cases, to existing Type 1 or 3 clients in emergency situations.
What sort of collateral
is expected on loans?
For Type 1 clients, the
group is viewed as collateral on the loan. If one member of
the group is unable to make her repayment, it is the group's
burden to cover her. The group is motivated to do so
primarily to enable them to continue using the program's
services in the future.
For Type 2 and 3 clients,
several forms of collateral must be provided. These include
land, livestock, mobile phones, bicycles, etc. that can be
sold or rented if clients default.
How is microfinance
funded?
MESO microfinance was begun
initially through private donations, though we are currently
seeking grant funding. MESO recently achieved operational self-sustainability at the branch level.
What does training and
preparation entail for clients?
Every three months the
program offers a week of training courses. Each morning, the
course "Introduction to Microfinance Services" is offered;
each afternoon, a different pair of small-business
development courses are offered, presented by local experts.
Typically, the first half of each course is devoted to
lectures, while the second half is open for questions and
group exercises. Although there is no entrance fee for
training courses, clients must pay a small fee upon
receiving their first loans designed to cover training
costs.
When applying for a loan,
clients also receive advice from the loan committee through
informal meetings. Here a client is advised regarding the
investments to be made with his/ her loan and management of
his/her business assets.
Training seminar
participants March 2005
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