The Group Loan Program


Sample icon1 This program is a convenient and easy financing mechanism to empower those with no capital.

The Organizational Loan Program (OLP)

Sample icon 2 We work with local organizations in order to form partnerships for achieving the program’s goal.

Rotating Credit for Schools (RCS)

Sample icon 3Aimed at improving schools infrastructure.In Eastern DR Congo most schools are in very poor conditions.

About Microfinance

What is microfinance: In its simplest form, microfinance provides basic financial services, such as credit and deposit-taking to historically marginalized populations that do not meet the criteria to do business with conventional banking institutions. This covers people whose lack of access to collateral means they cannot qualify for credit, and includes the world’s poor, who number over one billion and who live on less than $1.25 per day. Microfinance encourages economic stability through income generation rather than subsidies.

 

What is Microcredit: Another name for a micro-loan. A part of the field of microfinance, microcredit is the provision of credit services to low-income entrepreneurs.

What is In-Kind (Micro) loan: Instead of small loans in cash (Cash Loan), some organizations provide loans in kind. These can be, for instance, agricultural inputs like seeds and fertilizer to farmers who repay the loans with a part of their harvests or in cash after selling their produce. It can also be any items or assets (equipment, vehicles, clothing, shoes, food items, etc) to be monetized by the borrowers who repay in cash after selling or using the item.

Glossary of Additional Terms

Collateral: Asset pledged by a borrower to secure a loan, which can be repossessed in the case of default. In a microfinance context, collateral can vary from fixed assets (a bicycle, a sewing machine, etc.) to cross-guarantees from peers.

Group Lending: Lending mechanism which allows a group of individuals – often called a solidarity group – to provide collateral or loan guarantee through a group repayment pledge. The incentive to repay the loan is based on peer pressure – if one group member defaults, the other group members make up the payment amount.

Individual Lending: Single-client lending where repayment relies solely on the individual.

Individual Lending: Single-client lending where repayment relies solely on the individual.

Microentrepreneur: Microentrepreneurs are people who own small-scale businesses that are known as microenterprises.

Microenterprise: A small-scale business in the informal sector. Microenterprises employ fewer than 5 people and can be based out of the home. Microenterprise is often the sole source of family income but can also act as a supplement to other forms of income. Examples of microenterprises include small retail kiosks, sewing workshops, carpentry shops and market stalls.

Microfinance: The practice of providing financial services in very small increments to the working poor.

Microfinance Institution: Also called MFI. An institution that provides financial services to the world’s poor. A financial institution can be a nonprofit organization, regulated financial institution or commercial bank that provides microfinance products and services to low-income clients.

Microsavings: Savings in very small increments, frequently starting with just 1 USD and followed with very small deposits.

Remittance: Transfers of funds from people in one place to people in another, usually across borders to family and friends. Compared with other sources of money that can fluctuate depending on the political or economic climate, remittances are a relatively steady source of funds.

Self Help Groups: Also called savings groups. SHG are groups composed of about five to 20 members, with regular meetings in member’s homes. At each meeting all members save the same amount. The groups then lend these savings to members, store them in a lockbox, or deposit them in a group bank account in order to leverage a group loan. If an emergency strikes, members often can access a loan quickly from their group’s emergency fund. Savings groups provide limited but highly convenient services to large numbers of small, rural depositors.

Stepped Lending: The process by which borrowers who repay loans on time are eligible for increasingly larger loans. Stepped lending keeps initial risk at a minimum while allowing microentrepreneurs to grow their businesses and increase their incomes.

Sustainability: An organization’s ability to cover costs. There are varying degrees of sustainability, ranging from not sustainable to financially sustainable.

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