Microfinance Lending Microfinance Lending Process and Process and ProceduresProcedures

22

Microfinance Loan Flow ChartMicrofinance Loan Flow Chart

1) Client Orientationand Application

2) Credit and Background Investigation

3) Loan Approval

4) Loan Processing5) Loan Disbursement6) Loan Collection

33

Applicant comes to bank toattend the group client orientation

AO conducts individual client orientation

Attendance Sheet

Welcome and introductionof prospective clients

CLIENT ORIENTATION

Question and Answer

Client Logbook

44

ApplicationApplicationApplicant fills out the

application form

The applicant may choose to sign theform at the bank or bring the form to

his/her house

AO determines applicant’seligibility

If eligible, the AO schedules a CI/BI appointment

If not eligible, AOproposes a savings plan

55

Credit and Background InvestigationCredit and Background Investigation

AO conducts CI/BI toassess 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 adversefindings, application

is disapproved

If CI is positive, AO evaluates theapplicant’s debt repayment capacity

66

Preparations before the Credit Preparations before the Credit Committee MeetingCommittee Meeting

AO summarizes and preparesthe loan recommendation

sheet

AO organizes the applicant’s credit folder

Loan RecommendationSheet, Loan ApplicationCompleted CI/BI Form

Co-signer’s profile,Proof of payments, and

other documents

Supervisor reviewsapplicants credit

folder

Checks and reviewsfor inconsistencies

Loan application is endorsedto the Credit Committee

77

Loan Review and Approval (Credit Loan Review and Approval (Credit Committee Meeting)Committee Meeting)

PREPARATION

AO presents CI/BI Results to Credit

Committee

DELIBERATION RECOMMENDATION AND APPROVAL

CREDIT COMMITTEE:1) Convenes every week to

review loan applicationsrecommended for approval2) Composed of: GM/BM,

Loans Supervisor and AOs

1

2

3

4 5

88

Loan ProcessingLoan Processing(After the Credit Committee)(After the Credit Committee)

Supervisor informs theAO to prepare loan documents

If loan is disapproved,AO visits the applicant

and informs the reasonsfor disapprovalIf loan is deferred,

AO informs the applicantand obtains addt’l. info

If loan is approved, AO visitsthe applicant and gives a list of

requirements for his/her compliance.AO prepares loan documents.

Supervisor checks completenessof the credit folders

a) Credit Memo/CCb) Signature Cardsc) Promissory Noted) Co-Signer’s Statemente) Disclosure Statementf) Deed of Assign. of Dep.h) Security Agreement

99

Loan DisbursementLoan Disbursement

Supervisor gives copy ofcredit 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 orsupervisor explains to the

group their obligationsas Borrower(s) and

Co-Signer(s)

Supervisor gives the clienta copy of the Loan

Amortization Schedule andDiscount Statement

Client signs a withdrawal slipto withdraw the loan proceeds

from Savings Account or encashesCashier’s Check through

Teller

1010

Loan CollectionLoan Collection

Supervisor generates weeklypayments due/Collection Sheet

for the week every Monday

Cashier issues pre-numbered PRs to

AOs for collection

AO collects paymentfrom client

Records pymts andgives original PR

AO retains other copies which will beused to batch thetotal collections

Batches collectionsfor the day

Auditor accountsfor all PRs issued

vs. report

Forwards cashto Teller

Supervisorupdates accounts