|Guidelines for the Formation of Small Enterprise Loan Policies and Procedures (K-REP, 18 p.)|
Many NGOs have mounted projects intended to improve the standard of living of the poorer segments of the Kenyan population. Some of these projects have focused on small-scale economic activities, otherwise referred to as income generating or small-scale enterprise development. The basic problem addressed by these projects is the lack of access that the poor have to training, technical; and financial resources, which are necessary for the development and expansion of small enterprises. In many instances, NGOs have established loan funds to provide credit finance to poorer people to up-grade existing economic activities and/or start new ones. In this paper, guidelines ate presented for NGOs to Use in formulating loan policies and procedures of their loan schemes, either newly planned or existing, NGOs will have to closely review any policies or procedures formulated to ensure that they contribute to rather than inhibit: the realization of their aims.
The list can be Used as a planning tool both before the programme is started and while it is on-going (to pin-point areas in which the programme might be strengthened). It is hot a complete list in that it does not include all the alternative possible policies and procedures from Which NGOs might want to select theirs. The intention of this document is to aid NGO Boards and staff in thinking through the issues and practicalities related to credit projects.
The list is laid out in a manner which will make easier the process of thinking and deciding about what guidelines your programme will have in order to focus your energy and resources. The list is divided into three sections. In the first, "Client Characteristics", policies which pertain to the people to Whom you intend to make loans and/or provide services are considered: These policies identify those people and the economic activities (income generation and/or small businesses) Which you Will want to assist.
The section, "Loan Characteristic", identifies the conditions and limits within which you will make loans to those borrowers. None of these should be arbitrary; they should be determined by that which will meet borrower's needs. We all know we are not in a position to be able to respond to everybody's request for assistance, so we have to make decisions that will help us maximize or, better yet, optimize what we can do with the limited funds and other resources we have to work with. That is the reason you will want to think about the things mentioned in these guidelines. You will want these policies to include the very people you most want to assist.
The third grouping is of "Credit Programme Procedures". These outline the steps in the process of assisting the people from initial contact through success of the activity beyond the repayment of the loan. When thinking about these steps, you will be thinking about how you will go about providing loans and other services and how you will keep track of what you are doing so that you can learn from your experience and improve your assistance based on it and the changing needs of, the people and their enterprises.