Micro-business Loan
Individual Business loan
Employee Loan
Agricultural loan and Agri-Business loan group Based
Targets
- Women involved in rural and urban micro business activities
Loan purpose
Under this loan product, SMFI addresses the financial need of target women and men clients involved in micro business activities like Petty trade, services and others…
Eligibility criteria
- Above 18 and not legally incapable due to non-age reasons
- Permanent resident in SHMFI operating areas
- Trustful, good character and credit history,
- Physically fit to conduct the intended business,
Delivery procedures
- Targeting’
- Promotion,
- Identifying active women and men for contact
- Orientation (introducing the institution, its service, targets etc…)
- Character assessment
- Screening and selecting borrowers
Guarantee
- Personal guarantors
Personal guarantors should satisfy the following
- A permanent employee of government and non-government employee who can submit employer commitment to enforce repayment, or
- A trusted guarantor who can guarantee relatively small loan compared with his economic status and social respect having permanent settlement (own home) and business
- Large value assets like houses, vehicles, and share certificates or cash deposits in Sheger MFI or any other banks can guarantee multiple loans
Loan term
The maximum loan term of Micro business loan is 18 months. But repayment shall be made monthly (installment).
Loan size
The maximum loan size is 20,000.00 (twenty Thousand)
Sheger MFI provides individual based business loan to those who are interested to borrow and run business individually in Sheger Microfinance operational branches.
Targets
Sheger MFI provides productive loans to individuals who are interested to borrow individually. Targets include:
- Licensed business owners
- Individuals with feasible business plan who can provide satisfactory collateral or guarantee
- Members of associations who can provide common collateral
- Youth entrepreneurs including women
- MSE operators
- Other enterprise owners
Loan Eligibility and collateral for individual business loan
Eligibility criteria
- Legally capable
- Permanent resident
- Good character and credit history
- Viable and socially acceptable business plan
- Physically and mental capable to undertake proposed business
Collateral/guarantor
- House collateral
- The house to be held as collateral can be fully or partially completed, owned by the borrower him/herself or owned by third party.
- Its estimated market value is not less than 120% of the loan and located in the town where the lending branch is operating
- The borrower should submit legal house ownership certificate.
- Large value houses, can guarantee multiple loans.
- Authorized office should block or deliver official letter stating its commitment not to transfer the ownership to third party or register for any other obligation until Sheger MFI’s loan is repaid and clearance from the institution is issued
- In case of deposits, the banker shall provide legal evidence not to allow withdrawal until loans guaranteed are fully paid and officially confirmed by Sheger MFI.
- Vehicle Collateral:
- Any vehicle with assessed value of at least 150,000 birr
- Vehicle model from 1995 and recent ones
- Large value vehicles can guarantee multiple loans
- Owned by borrower or third party but properly blocked by authorized body for the loan/loans/ borrowed
- Not tax exempted
- Personal Guarantee
- The personal guarantee must be a senior business person with certified running capital of at least 3,000,000.00-4,000,000.00 Br.
- Or a senior employee with salary greater than 8,000 birr but amount of guarantee should not be greater than eight times his/her salary
- The stock and capital must also be assessed and registered at the time of loan.
- If the person to be guarantee fail to satisfy requirements under no.1 above alone the supposed borrower can present another person for the remaining amount.
- The personal guarantee must be totally free of Bank debt but if his/her capital appears to be more than the amount stated here under no.1 and the borrower is Sheger shareholder the loan approval committee will consider such loans
- Share certificate
- Share certificates of banks and microfinance institutions
- Amount of loan will be not more than 100% of the share amount in birr.
- Large shares may also guarantee multiple loans
Loan size
The maximum loan size of Sheger MFI individual loan is 1% of its capital for an individual loan as indicated on NBE directive. However, loan size of individual business loan for a borrower is determined based on business plan set by a borrower. Consequently, the loan to be approved for a particular borrower should be backed by a collateral having value 20% more than the loan approved.
Sheger MFI provides loan service to employees so that they utilize/invest for different economic reasons stated here below.
Targets
Permanent employees of Ministerial offices, bureaus, Agencies, Corporations, Institutes, government initiated /financed/ development enterprises, NGOs that are working in Sheger MFIs’ operational areas,
Loan purposes of Employee loan
Employee loan would be delivered for any personal purpose of employees like medication, education, purchase of household equipment, to run personal businesses and etc…
Eligibility criteria
Good credit history that to be confirmed by his/her employer, both the borrower and the guarantor/s should at least left with five (5) years for retirement, present one government employee as guarantor or his/her own house or third party house as collateral.
Note:
- The guarantor cannot borrow from Sheger MFI until the loan he/she guaranteed is fully repaid.
- The salary of the guarantor should at least equivalent with the borrower otherwise, the size of the loan is determined by one of the two salaries whichever is lower or the borrower can submit two guarantor whose salary sum is equal or higher than the borrowers’ salary.
- The loan that to be approved by house collateral should be lower than the estimated market price of the house by at least 20%.
- The house to be held as collateral can be either the property of the borrower or the property of third party who gives his/her property as collateral on behalf of the borrower.
- Employers’ can deliver collateral or guarantee for their employees and tripartite loaning agreements be made among Sheger MFI, employer and employees.
SHEGER will deliver the following services to its clients
Saving Mobilization
Solidarity group Based Agricultural Loan
Solidarity group Based Agri- Business Loan
Non-Financial Services
Business Training
Marketing Advice and Consultation
Solidary group based
SHEGER MFI will primarily adopt solidarity group (SG) methodology to deliver services to its clients and as a loan guarantee mechanism.
Solidarity Group (SG) is a self-formed group that will comprise 3 to 6 self-selected micro business operators who know and trust one another, joined together on their free will for a common interest of accessing financial and other services from the institution.
Definition of terms
Solidarity Group: 3-6 members that are willingly organized to access group loan through solidarity group liability principles.
For the purpose of this credit policy Poor shall mean a person whose economic status is below the poverty line among the community based on the wealth ranking and evaluation criteria of the area.
Saving financial services
Solidarity Group Liability: A joint and several liability and accountability for the loan accessed by group
Community is a service unit for 3-5 groups; A community in sheger shall be established to facilitate financial services and loan management.
Guarantor is a person or organization that promises to pay a loan if the person that borrowed it cannot pay it back
Loan Size
The maximum loan size for group based loan is Birr 12,000.00