Financial Services: Chiclayo & Piura
Goal: Help the participant use his/her personal resources first for financing, i.e., personal savings, selling an asset, partnering with another person, personal loan from a bank, etc. After using all personal resources, Andes-ECH will approve and deliver a small loan so the participant can launch a new business.
Loan Types:
Short Term Loans
Working Capital Loans
a. to acquire short term assets such as inventory
b. to be repaid once the new inventory is converted into cash as it is sold to customers.
c. Have a maximum maturity of 12 months
Parallel Seasonal Loans
a. are provided as additional funds to finance inventory
b. usually provided during the busiest seasons for micro enterprises. In July, Peru celebrates its national holiday. In December, Christmas holidays. On both occasions, salaried workers receive an extra paycheck. March and April are busy when parents purchase items to send their children back to school.
If seasonal loan, it should be repaid in full no later than the time at which extra seasonal income is received with a maximum term of 60 days. Extension only if the client applying for credit can demonstrate that extra capital is needed at that moment and that it can be repaid with a few weeks’ time.
Long Tern Loans
Fixed Assets Loans
a. to purchase, expand or remodel fixed assets
b. loans initially will have a maximum maturity of 24 months
Infrastructure Loans
a. loans to repair stores or shops
b. maximum maturity of 36 months
Interest Rate
Loans will be repaid in equal installments at an annual interest rate of 18%, flat
rate.
Loan Amount
New businesses: up to $1,000, US
Existing business: up to $2,000, US
Repayment
Number of installments: Loans will be repaid in 6-36 equal installments
Grace Periods
Payments will be delayed until the funds have helped the new or existing business, generate cash flow. The first installment repayment will be made three months after the receipt of the first disbursement of the loan. (usually three disbursements) and subsequently after every month until the entire loan is satisfied.
Loan Agreements
The Andes-ECH Credit Program holds the client to certain performance standards and restrictions in order to ensure that the funded business can repay the loan, including:
- Maintenance of accurate records and financial statements
- Limits on total debt
- Restrictions on sale of fixed assets
- Performance standards on financial ratios
In short, our micro enterprise programs consist of three basic services:
1. Comprehensive formal business training
2. Access to capital
3. Follow-up assistance
These services are delivered in a supportive environment that conveys the message that people can improve their lives through initiat More Stories...
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