Sunday, September 18, 2011

Keeping the Mission in Mind

FINCA’s Mission: Promote integral development in communities, through the formation and strengthening of Community Credit Enterprises.
Nathalia, the treasurer, selling the first stocks

Two weeks ago we elected the board, credit committee and fiscal and purchased the first stocks. We sold 48 stocks, at 5000 colones each. Our social capital is 240,000 colones or around $480.

Yesterday was step 8  ½; granting the first loan. Please note, that once again we have a ½ step.

One side of me pushes to finish each step in time, to reach the end “goal” faster. But then I step back- realizing I am losing sight of the mission; which is to promote integral development in communities. This means not just the economic growth that will come from the access to loans, but also the education and financial literacy. Spending the time to make sure all elements of the process stay clear is crucial in working towards FINCA’s mission.
CCE- Cristo Rey


So we spent all of Saturday afternoon going over the process for soliciting a loan, the analysis of a loan, and how to calculate the repayment schedule.

The CCE charges a monthly interest rate of 2% (although the annual rate of 24% interest can sound high, it is important to take into account all the benefits of having the bank local, not paying for transportation, paperwork etc. and also earning dividends on their stocks. Many microfinance institutions charge a much higher annual interest rate).

Nathalia, our treasurer, is taking out the first loan for her artisan business. She wants to buy a new machine that cuts wood, and will make her work easier and faster. The machine costs around 100,000 colones or $200. Because this is the first loan, she has agreed to a short term loan of 8-months, in order to keep the money circulating.

Month
Initial balance
Interest
Principal
Ending Balance
Total Payment Due*
1
100,000
2,000
12,500
87,500
13,625
2
87,500
1,750
12,500
75,000
13,625
3
75,000
1,500
12,500
62,500
13,625
4
62,500
1,250
12,500
50,000
13,625
5
50,000
1,000
12,500
37,500
13,625
6
37,500
750
12,500
25,000
13,625
7
25,000
500
12,500
12,500
13,625
8
12,500
250
12,500
0
13,625
* To calculate the total payment due, we averaged the interest payments + the principal payment:                                                                          

It was essential that I took the time to really make sure they understood the whole loan process, as one of the most important aspects of microfinance is transparency. They need to understand what they are paying with each loan repayment and be able to complete the loan analysis, repayment schedule and forms with confidence.

Thus, we will finish step 8 next week, with payment of commission (3% to pay for administrative costs of the loan) and filling out receipts.

I’ll end with my golden moment: Cali, the president, asked if he could take home the loan repayment schedule we had written on large construction paper, "to study".

CCE-Cristo Rey voting on new members
It is so inspiring, so motivating that the members all have so much interest, and desire in the Community Credit Enterprise’s success. 

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