GUIDELINES FOR NEW PRODUCT IMPLEMENTATION

A. RATIONALE

Growing market for microfinance is now highly regarded as vital element in the
development of small and medium enterprise. With this development, SME has different
need of capitalization to finance their business enterprise.

To be competitive in the market, we have to evolve from offering only one (1) loan
product (CARE Group Loan) to diverse loan products like individual and association loan.

B. OBJECTIVE

1. To disburse loans at least 2 million for SME financial services for the first 2 months
of implementation.

2. To achieve 100% loan repayment

C. GENERAL GUIDELINES

Eligible Borrowers: Eligible Loan Charges Savings Penalty

Projects/Business Requirement

*Must be between 21- *At least one year Processing fee: *Depends on 2.5% per month
63 years old during the continuous business the availed Type of the past due
time of application; operation; and, 
  2% for existing of Loan amortization
client Products (Principal plus
*Borrower must be in Interest)
good health condition  3.5% for new client
*Engaged in trading,
*At least 3 years manufacturing, Other charges deducted
residency if processing and from the loan proceeds
homeowner services. (includes Appraisal Fee)

*5 years if “renter” Documentary Stamp Tax

and at least one family (DST): P1.00 per P200
member is employed loan


Approved by:

MARIA ROSARIO C. WEE MARIA HENRIETTA C. DELA PEÑA

MARIA VERONICA C. BASILIO MARIA VICTORIA C. TAN

 D. PRODUCT FEATURES

1. Negosyong Samahan Loan

Eligible Borrowers: Male or Female

This is a loan window for the community-based organizations undertaking an

association’s enterprise.

Association can avail a minimum of 101,000 to 200,000-loan amount on a

collateralized basis that includes liquidable assets like land, vehicles, buildings and
other valuable items.

The association must provide PDC’s (Post-Dated Checks) as a form of payments for
their loan amortizations.

2. Negosyong Maunlad Loan

Eligible Borrowers: Male or Female

It’s where individual accountability is undertaken and collaterals are required.

Potential borrower may have business established with production of goods or
finished product and probably employed a minimum of 2 workers to sustain the
enterprise.

This loan product addresses the need of micro entrepreneurs who requires bigger
capitalization on their enterprise for continuous growth and development.

Potential borrowers can receive a minimum of 31,000 to 100,000-loan amount. The

association must provide PDC’s (Post-Dated Checks) as a form of payments for
their loan amortizations.

3. Grupong Maunlad Loan

Eligible Borrowers: Female

Potential borrowers must form a group of 5, which co-guarantees each other loan.
Each member can receive a minimum of 21,000 to 30,000-loan amount.

Approved by:

MARIA ROSARIO C. WEE MARIA HENRIETTA C. DELA PEÑA

MARIA VERONICA C. BASILIO MARIA VICTORIA C. TAN

E. PRODUCT FEATURES MATRIX

Product Negosyong Negosyong Maunlad Loan Grupong Maunlad Loan

Features Samahan Loan
Meeting Monthly Monthly Weekly
Frequency of Monthly Bi-Monthly Weekly
Payments
Number of Negosyong Samahan Loan + Negosyong Maunlad Loan + Grupong Maunland Loan = Portfolio-
Load based; Loan Portfolio Target set by Operations Head
(minimum)
Payment Mode PDC PDC PDC
Security Chattel Mortgage: Chattel Mortgage: CARE Group Collateralized Agreement:
Chattel Mortgage,OR/CR, Land Title or
Requirements OR/CR OR/CR
Appliances
Land Title Land Title
 125% for depreciated assets like
vehicle and appliances
 100% for land and other assets Hold-out Deposits (for CFI
with increasing value) guarantee): 20% of the Loan Amount
plus

Hold-out Deposits (for CFI

guarantee): 25% of the Loan
Amount
Capital-Build Initial Deposit: 10% 200 pesos per mandatory 50 pesos per week mandatory savings
Up of the loan amount savings
Initial Deposit: 10% of the loan Initial Deposit: 20% of the loan
amount amount (treated as hold-out deposit)
CBU Interest Not applicable Interest on CBU should be + 1% Interest on CBU should be + 1% (paid
(paid to accounts) of the to accounts) of the prevailing bank’s
prevailing bank’s interest interest payment on savings deposit.
payment on savings deposit. It is It is computed every Loan Cycle five
computed every Loan Cycle (five months after loan disbursement).
months after loan
disbursement).

Product Negosyong Samahan Negosyong Maunlad Loan Grupong Maunlad Loan

Features Loan
Interest Rate 2.5% per month 2.5% per month (6 months) 2.5% per month
1.5% per month(12 1.5% per month (12 months)
months
Processing 2% 2% 2%-existing
Fee 5% -1 year(101k-200k) 3.5%-6 months(31k-50k) 3.5%(new)
5%- 1 year(51k-100k)
Loan Not yet applicable 3.85 per 1,000 amount of loan 3.85 per 1,000 amount of loan
Insurance Fee

Approved by:

MARIA ROSARIO C. WEE MARIA HENRIETTA C. DELA PEÑA

MARIA VERONICA C. BASILIO MARIA VICTORIA C. TAN

Micro- Not yet applicable Premium depends on number of Premium depends on number of
insurance enrollees enrollees
Qualified dependents: Qualified dependents:
 Legal Spouse  Legal Spouse
 Maximum of three  Maximum of three children
children Parents (for single clients)
Parents (for single clients)
Penalty 2.5% interest charge 250.00/bi-monthly 250.00/week (part of PN)
monthly 500.00/monthly 1,000/month
1,000.00/month
Initial Loan Approved Credit Line Approved Credit Line from 21,000-30,000
from 101,000 to 31,000 to 100,000 (Cash-flow based)
200,000 (Cash-flow based)
(Cash-flow based)
Re-loan No matrix/only No matrix No matrix/only Performance/Cash flow base
Increase approved Credit Line approved Credit Line
Documentary P1.00 per P200 loan
Stamp Tax

Product Negosyong Samahan Negosyong Maunlad Loan Grupong Maunlad Loan

Features Loan
Documentary  Loan  Loan Application  Loan Application
Requirements Application  Business Proposal  Business Proposal
 Business  Promissory Note  Promissory Note
Proposal  Negosyong Maunlad  Grupong Maunlad Pictures
 Promissory Pictures (includes (includes Group’s
Note Member’s Business Businesses and its
 Negosyong  Barangay/Purok members)
Samahan Certification on  Business Permit(barangay)
Pictures Member’s Business  PDC’s
(includes Existence  Voluntary Surrender of
association’s  Business Deeds(CG Level)
business and Permit(city/municipal)
its members)  PDC’s
 Business
Permit
 MOA/Board
Resolution

Approved by:

MARIA ROSARIO C. WEE MARIA HENRIETTA C. DELA PEÑA

MARIA VERONICA C. BASILIO MARIA VICTORIA C. TAN

 F. Conduct of Credit Investigation or Business Inventory Checking with the
Prospective Clients
Stages of Investigation & Approval

1st: CI/BI Investigation to Prospective Clients

2nd: Confirmation/Loan Documentations
3rd: Screening by Credit Committee Team
4th: Loan Processing
5th: Loan Disbursement
6th: Loan Collection

Guidelines:

No. Transaction Flow Details Responsible Person

1 Credit Investigation
2 Loan Investment Plan (LIP)
validation
3 Loan Approval
4 Membership Education
Session
Conduct CI/BI using Loan Investment Plan Development Officer
Screening and validation of Loan Development Supervisor
Investment Plan
a. Confirmation visit of approving
authority to Prospective Client
b. Result dissemination to DO
c. Submission of loan requirements
for qualified borrowers
d. Verification of authenticity of land
titles (for mortgage) and OR/CR
(for chattel mortgage)
e. Verification of client’s standing at
the bank to determine his/her
capacity to pay and credibility
Credit Committee approved loanable Credit Committee (BM,
amount to Prospective Clients VP-Operations or
designated
representatives)
Orientation of detailed loan products, DO, DS, BM
borrowers obligations and loan processing

Approved by:

MARIA ROSARIO C. WEE MARIA HENRIETTA C. DELA PEÑA

MARIA VERONICA C. BASILIO MARIA VICTORIA C. TAN

 G. CARE Group Meeting

G.1 For Negosyong Samahan and Negosyong Maunlad Loan Meeting

Guidelines:

No. Transaction Flow Details Responsible Person

1 CARE Advancement 1.1 Borrowers attend a monthly Branch Manager
Meeting advancement meeting at the
branch office or designated venue

1.2 Discussion of values formation Development Supervisor

input, livelihood skills training and
other developmental activities

G.2 For Grupong Maunlad Meeting:

No. Transaction Flow Details Responsible Person

1 Grupong Maunlad 1.1 Identify nearest and existing CARE Development Officer
Advancement Meeting Group Meeting in the area

1.2 If the event that no existing CARE Development Supervisor

Group established in the area, Grupong
Maunlad borrowers must agree with
the venue in their locality.
1.3 Discussion of values formation input, DO, DS, BM
livelihood skills training and other
developmental activities borrowers
obligations and loan processing

H. Loan Disbursement Guidelines

Guidelines:

No. Transaction Flow Details Responsible Person

1 Submission of Loan
Requirements
2 Encoding of Borrowers Data
1.1 Borrowers must submit the complete Development Officer
loan requirements 1 week before the
scheduled loan disbursement.
2.1 Preparation of Summary of Loan Branch Accountant
Proceeds (SLP) which includes loan
deductions like DST fee, hold-out deposits,
loan insurance and micro-insurance

Approved by:

MARIA ROSARIO C. WEE MARIA HENRIETTA C. DELA PEÑA

MARIA VERONICA C. BASILIO MARIA VICTORIA C. TAN


3 ATM Card Processing
4 Loan Disbursement
premium.
3.1 Filling-out of ATM Card application form Development Officer
3.2 Submission of form to the bank Development Supervisor
4.1 Borrowers sign in the Promissory Note Branch Manager
(PN) and Summary of Loan Proceeds (SLP).
4.2 Borrowers hand-over the Post-Dated
Checks (PDC’s) to Branch Manager
4.3 Distribution of Checks to Payee
4.4 Information dissemination on the
potential risk of un-funded Post-Dated
Checks (PDC’s), schedule of loan
amortizations and other relevant
information
4.5 Withdrawal of loaned amount to
designated bank

Process:

# OF MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY

WEEKS
1st week Marketing of Products by the DO & fill-out of application form by the interested clients
BM/DS will conduct confirmation
Verification of
After confirmation Checking &
application
DO will conduct CI/BI to the of BM/DS the Preparation for
2nd week form-DS
interested clients interested clients submission of
Orientation of -
will submit the Loan Documents
BM
requirements. to CRECOM
3rd week Submission of
Loan
complete docs.
Disbursement
to CRECOM
4th week

Note: Loan disbursement and advancement meeting scheduled only every 3rd Thursday of
the month.

Approved by:

MARIA ROSARIO C. WEE MARIA HENRIETTA C. DELA PEÑA

MARIA VERONICA C. BASILIO MARIA VICTORIA C. TAN

 I. Collection and Reporting Guidelines
Guidelines:
No. Transaction Flow
1 Submission of Post-Dated
Checks (PDC’s)
2 Safeguarding of PDC’s
3 Depositing Due PDC’s
4 Recording of Collections
Approved by:
MARIA ROSARIO C. WEE
MARIA VERONICA C. BASILIO
Details Responsible Person
1.1 Borrowers must hand-over the Branch Manager
required Post-Dated Checks (PDC’s) to
Branch Manager during the scheduled
loan disbursement.
1.2 All Checks must be in the name of
CARE Foundation, Inc. and not in
individual person for control purposes.
1.2.1 Five (5) PDC’s for Samahang
Negosyo and Negosyong Maunlad
Loan
1.2.2 19 PDC’s for Grupong Maunlad
Loan
1.2.3 First payment will be deducted to
the loan proceeds.
2.1 Collected PDC’s must be kept at Branch Accountant
the vault provided in the branch
2.2 Ledgering of PDC’s in the logbook
to monitor its actual due
3.1 Branch Accountant must hand-over the Branch Accountant
due PDC’s to the Branch Manager
3.2 Branch Manager advise DO regarding Branch Manager
the due PDC’s to ensure sufficiency of
funds
3.3 Branch Manager deposit the due PCS’s Branch Manager
at the depository bank
3.4 Issuance of Official Receipts Branch Accountant
3.5 The issued Official Receipts must also BA/DO
be given to Development Officers so that
they can bring it during the scheduled CARE
Group meeting.
4.1 DO must update Loan and CBU Ledger Development Officer
after ensuring that the PDC’s deposited are
good
4.2 Branch Accountant must post in the T3X Branch Accountant
System the collections transpired for the
day.
4.3 Branch Accountant must record the due
Checks as loan income in the Daily Account
Balance with the following entry:
dr. Cash xxxxx
cr. Loan Receivable xxxxx
Accrued Interest Income xxxxx
MARIA HENRIETTA C. DELA PEÑA
MARIA VICTORIA C. TAN
 J. Remedial Management for Delinquent Accounts

Guidelines:

No. Transaction Flow Details Responsible Person

1 Notification of Un-cleared a. Checking of insufficiency of funds Branch Manager
Checks to client’s account at the bank
2 Negotiation to Settle a. Negotiate with bank as to bounced Branch Manager
Obligations Checks
b. Contact CARE Group/borrowers as DS/DO
to insufficiency of funds
c. In case of non-settlement, DS/DO
demanding of collaterals is
applied.
d. On the last remedy, filing of Estafa BM/Legal Consultant
case at the court maybe required.

Approved by:

MARIA ROSARIO C. WEE MARIA HENRIETTA C. DELA PEÑA

MARIA VERONICA C. BASILIO MARIA VICTORIA C. TAN