MICRO AGRI PRODUCT
Module 2, Session 2
MAP Loan Features:
Loan Process & Procedures
Designed After the MABS Approach to Microfinance
Session Objectives
By the end of the session, the trainees are expected to:
• Understand the rationale behind the micro
agri product lending process and procedures
• Use the generic loan features as guide in
writing the bank’s MAP loan process and
procedures
The Microfinance Loan Process
1) Loan Promotion
& Application
6) Loan Collection/
Monitoring
2) Client Selection
(Loan Analysis)
5) Loan Release
3) Loan Approval
4) Loan Documentation
Lending Process & Procedures
Promotion
• Reach out to the communities and visit
potential clients in their workplace (farm or
businesses in town).
• Organize orientation sessions at
Barangays.
• Entertain walk-in clients
Lending Process & Procedures
Promotion

Due to increasing competition, AOs must
adopt aggressive marketing strategies

Promotion is not a substitute for high
quality services

The best and least expensive promotion
a credit program could have is that of a
satisfied client.
Lending Process and Procedures:
Loan Application
• The loan the application is simple (one page).
The AO fills out the application with the client
• Most of the information in the application for
first loans refers to the client’s “character”
[stability, entrepreneurship, reputation, and
repayment behavior – (SERR)]
• Most of the information for repeat loans refers
to repayment behavior of past loans
Lending Process & Procedures:
LOAN ANALYSIS-FIRST LOAN
• Character/Risk assessment: analysis of
client’s Stability, Entrepreneurship,
Reputation, and Repayment behavior (SERR
in CIBI for first loan)
• Cash flow: repayment capacity based on all
household income from farm activities,
businesses and others (including salaries,
pensions and remittances).
Lending Process & Procedures:
LOAN ANALYSIS-REPEAT LOANS
Analysis of Repeat Loans are based on:
• Repayment behavior of previous loans
• Results of monitoring visits to determine
changes/ potential problems in the client’s
situation
• Cash flow to determine repayment capacity
and possible increases in loan amounts
Lending Process & Procedures:
LOAN ANALYSIS-Repeat Loans
A cash flow analysis may be done every other
loan ONLY IF repeat loan amount is
1.
2.
3.
4.
the same or within 10% increase
not more than P25,000
loan term is 6 months or less, and
client has not made payments with delay of not
more than 3 days.
If a borrower does not meet these qualifications, a
cash flow analysis have to be done for every loan.
Lending Process & Procedures:
Loan Approval
• Loans will be approved by a Credit
Committee composed of the Branch
Manager, Product Head, Supervisor, and
Account Officer (feedback only)
• Approval limits depend on the policy of the
bank
Lending Process & Procedures:
Loan Disbursement
• Loan proceeds will be disbursed in cash in a
single disbursement
• Loan proceeds will be deposited in the client’s
account with the bank
Lending Process & Procedures:
Loan Monitoring
• AO visits the farmer within a week of
disbursement.
• Supervision on the use of the loan as planned is
not intended but to instill the idea that the AO is
keeping close follow-up
• AO will visit on-time first borrowers at least once a
month.
• On time repeat borrowers will be visited once a
month.
Lending Process & Procedures:
Loan Monitoring
• Close and timely monitoring of the portfolio
performance and delinquency is essential
to the product’s success
Lending Process & Procedures:
Loan Collection
Strict adherence to the Zero Tolerance approach:
Banks must have well-defined collection policies that clearly
guide AOs on appropriate actions to take.
• First missed payment: AO contacts the client within 24
hours and sets payment date within two days of
contact
• Failure to make payment on agreed date: AO and
supervisor deliver first warning letter signed by the
manager and agree on a payment date and time
within 24 hours of contact
Lending Process & Procedures:
Loan Collection
• Failure to make payment of second agreed
date: AO and branch manager deliver second
warning letter and agree on a payment date.
AO contacts co-maker(s) and discusses
possibility of voluntary surrender of serialized
assets.
• Failure to make payment of third agreed date:
AO delivers third and final warning letter
signed by the manager.
Lending Process & Procedures:
Loan Collection
• Failure of client to make payment on
fourth agreed date, AO and branch
manager endorse the account to the
bank’s legal counsel for collection or for
filing of appropriate legal action.
Lending Process & Procedures:
Loan Restructuring
• Restructuring/ rescheduling of past due loans
will only be granted in exceptional cases:
• Major, unexpected, natural disasters such as
earthquakes, typhoons, etc. adversely
affecting the client’s family and/or farm
Lending Process & Procedures:
Loan Restructuring
• Serious illness or accident of the client or
immediate family member that requires the
business to be closed for an extended period of
time
• The client must demonstrate ability to pay the
new payment plan
• Terms must not exceed the original term of the
loan
Lending Process & Procedures:
Loan Restructuring
• Restructuring will only be allowed once and
not repeated.
• Refinancing/Rescheduling must be approved
by the General Manager
• Restructured loans will be tagged as
“restructured” and closely monitored.
End of Presentation