LOAN PRODUCTS

The first need expressed by people in rural communities is to obtain cash to finance their business activities. CREDIT has come alongside its clients by offering them loans that are better adapted to the diversity of their needs.

CREDIT provides small business and agricultural loans of a variety of sizes to meet the needs of poor Cambodian women and their families for livelihood development.  CREDIT’s core product is individual loan, which allows clients to structure loan around their personal needs and ability to repay. CREDIT also offers the opportunity for clients to borrow in either Riels or Dollar currencies.  With all loan products, people may discuss with Credit Officer how often they will repay - weekly, fortnightly, or monthly. Payments can be made at CREDIT offices or to Credit Officers visiting village.

Individual Loan

Individual loan is a core loan product of CREDIT, and they represent about 97% of the loan portfolio. CREDIT offers individual loan in both Riels and Dollar currencies. This type of loan is targeted to clients who have physical collaterals. The loan amount varies from KHR 200,000 or US$ 50 to KHR 40,000,000 or US$ 10,000, with a maximum length of 24 months. The charged interest rate varies from 2% to 3% per month, depending on the loan amount, type of currency, and repayment location, by using a declining balance for calculating repayment. Clients are offered options to pay the loan weekly, bi-weekly, 4-weekly, or monthly and clients can pay off their loans after 4 months repayment at any time without additional interest charged.

Solidarity Group Loan

This group loan product was designed to meet other target clients in the poorest rural areas.  Typically, these clients do not own land, house, or any other assets, they could be used as collaterals.  They are, on the other hand, experienced in their activities and are willing to borrow in order to generate income to support their families.  Their activities encompass micro trading, farming, animal raising, palm sugar production, and various other services.

As of Sept 2008, the solidarity group loan portfolio represents 1% of CREDIT’s total loan portfolio. A joint- liability group loan consists of two to five people who will guarantee each other in loan repayment. The maximum loan amount is KHR 1,200,000 or US$ 300 per group member, with an interest rate ranging from 2.5% to 3% per month depending on currencies and repayment location with a maximum duration of 12 months. The interest rate calculation is declining balance.

Community Bank Loan

The Community Bank loan product is designed to serve the clients which are in the poorest rural areas and vulnerable in the community. Clients form joint-liability groups of four to six. Several groups form a Community Bank Association. The Community Bank Association is led by an elected chief from the community bank members and facilitated by a Specialized Credit Officer (Community Bank Loan Officer). The maximum loan amount in the 1st cycle is KHR 500,000 (US$ 125), the 2nd cycle KHR 700,000 (US$ 175), the 3rd and so on are KHR 1,000,000 (US$ 250). The maximum loan length is 12 months, but is determined by the majority vote in the community. The interest rate is charged at 2.85% per month using declining balance calculation method with monthly interest repayment.

Initial assessment of this product shall be conducted in November while full project assessment shall be conducted in November 2008. It is projected that after successful pilot testing, VSU product would be rolled out in existing branches by 2009.