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B1 Mf Lending Procedures (1)


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B1 Mf Lending Procedures (1)

  1. 1. Microfinance Lending Process and Procedures
  2. 2. Microfinance Loan Flow Chart 1) Client Orientation and Application 2) Credit and Background Investigation 3) Loan Approval 4) Loan Processing 5) Loan Disbursement 6) Loan Collection
  3. 3. Applicant comes to bank to attend the group client orientation AO conducts individual client orientation Attendance Sheet Welcome and introduction of prospective clients CLIENT ORIENTATION Question and Answer Client Logbook
  4. 4. Application Applicant fills out the application form The applicant may choose to sign the form at the bank or bring the form to his/her house AO determines applicant’s eligibility If eligible, the AO schedules a CI/BI appointment If not eligible, AO proposes a savings plan
  5. 5. Credit and Background Investigation AO conducts CI/BI to assess the applicant AO brings along the loan application form to validate information contained in the form AO visits references: suppliers, previous and present creditors, business neighbors, and residence If necessary, credit verification letters are sent to the applicants creditors If there are adverse findings, application is disapproved If CI is positive, AO evaluates the applicant’s debt repayment capacity
  6. 6. Preparations before the Credit Committee Meeting AO summarizes and prepares the loan recommendation sheet AO organizes the applicant’s credit folder Loan Recommendation Sheet, Loan Application Completed CI/BI Form Co-signer’s profile, Proof of payments, and other documents Supervisor reviews applicants credit folder Checks and reviews for inconsistencies Loan application is endorsed to the Credit Committee
  7. 7. Loan Review and Approval (Credit Committee Meeting) PREPARATION AO presents CI/BI Results to Credit Committee DELIBERATION RECOMMENDATION AND APPROVAL CREDIT COMMITTEE: 1) Convenes every week to review loan applications recommended for approval 2) Composed of: GM/BM, Loans Supervisor and AOs 1 2 3 4 5
  8. 8. Loan Processing (After the Credit Committee) Supervisor informs the AO to prepare loan documents If loan is disapproved, AO visits the applicant and informs the reasons for disapproval If loan is deferred, AO informs the applicant and obtains addt’l. info If loan is approved, AO visits the applicant and gives a list of requirements for his/her compliance. AO prepares loan documents. Supervisor checks completeness of the credit folders a) Credit Memo/CC b) Signature Cards c) Promissory Note d) Co-Signer’s Statement e) Disclosure Statement f) Deed of Assign. of Dep. h) Security Agreement
  9. 9. Loan Disbursement Supervisor gives copy of credit ticket/cashier’s check to Teller for disbursement/posting Borrower together with spouse /Co-Signers, come to the bank to sign the loan documents Before signing, the BM or supervisor explains to the group their obligations as Borrower(s) and Co-Signer(s) Supervisor gives the client a copy of the Loan Amortization Schedule and Discount Statement Client signs a withdrawal slip to withdraw the loan proceeds from Savings Account or encashes Cashier’s Check through Teller
  10. 10. Loan Collection Supervisor generates weekly payments due/Collection Sheet for the week every Monday Cashier issues pre-numbered PRs to AOs for collection AO collects payment from client Records pymts and gives original PR AO retains other copies which will be used to batch the total collections Batches collections for the day Auditor accounts for all PRs issued vs. report Forwards cash to Teller Supervisor updates accounts