This is the type of loan augmented to benefit people with small businesses but who cannot easily access credit facilities due to lack of collateral securities. A community Finance Group (CFG) can be formed with a minimum of five members and maximum of thirty members who have been operating a business for at least one year in the same locality.
They elect an executive committee comprising of three members; Chairperson, Treasurer and Secretary to play the role of managing the group and recruiting new members.
Group loan applicants can pledge chattels or personal possessions as security against their loans. Repeat clients can apply for subsequent loans.
Members in the CFG co-guarantee each other in their respective subgroups. It denotes that if a member defaults on his/her instalment, the rest of the group members are responsible to pay the instalment and entire outstanding balance.
The solidarity loan is designed primarily to provide credit services to large numbers of micro entrepreneurs. This loan product has 6 fundamental characteristics:
Solidarity group membership is voluntary and no person should be compelled to become or remain a member of the group after all the obligations are fully met for the group and Sseguku Microfinance Ltd.
Project eligible for financing under solidarity group loan product are any micro enterprise/business activity that generates income for the household of the borrower and which the borrower has prior knowledge, skill and experience. It’s important that the client commits to invest loan proceeds in his/her business. This will enable him/her to foster business growth and meet the terms of repayment of his/her loan.
All registered members of each of the solidarity group will be trained for a period of 4 weeks attending once in a week.
All solidarity group loans must be cross guaranteed by all group members. Should any of the group members fail to pay the full instalment or any part of it for the week, the other group members are liable to contribute to ensure 100% payment of the group for the week. Borrowers from solidarity group must specify additional, specific business and personal asset as security that members can seize and sell if they default on the loan.
Solidarity group membership and Sseguku microfinance registration of an individual may be terminated by that individual member, members collectively or by Sseguku microfinance management for any of the following reasons: