New Approach to Micro Loans

Did you know that family circles are a better business solution for local small scale development programs? Did you also know that group financing is also an effective strategy for community based micro loans?

Savings Loans Association (SLA) is currently embarking on giving small micro loans to group members as opposed to individual micro loans. Members of the group (on an average, a group has 5-10 members) are responsible for issuing smaller loans to each member group. There are a number of advantages to this strategy:

1) The group is responsible to ensure that all monies received are returned for to SLA so that others can also borrow and improve economic livelihoods.

2) Savings, and rational decision skills are empowered among members.

Savings Loans Association will officially embark on the first group micro finance to a group of 8 members this coming month (June 2009)

Group Loans-A solution for micro credit Programs

Savings Loans Association with the support of a Dutch organization has embarked on a unique strategy to ensure that all micro loans given for community and household empowerment are utilized and returned continue the development intervention. How does this approach work?

1) The community identifies a project that would generate income to support individual households and community in general
2) The community members select individuals to join the groups comprising of 5 members per grou
3) SLA provides a block fund (micro loan) to the group
4) Each member of the group receives an average of $100-$250 micro loans and all payments to SLA is made as a group-If one defaults, the group has to meet the requirements for defaulting.

The advantage of this process allows individual members in the group to comply and ensure that all payments are done and on time-otherwise if not, the group is asked to pay a fine.

All members of the group feel ownership of the group project and individual household are empowered to sustain their lives.