How it

works

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Microfinance

criteria

Investment

Criteria

approval

Approval

Process

accountability

Accountability

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MFI INVESTMENT DUE DILIGENCE CRITERIA

AND APPROVAL PROCESS

Prior to an SBF investment, each potential investee will be analyzed through SBF’s rigorous due diligence process to ensure the MFI aligns with SBF’s qualitative and quantitative criteria. While each potential investee will be analyzed as a stand-alone entity without regard to parent companies or affiliations, some instances may occur where affiliations can augment the effectiveness of SBF’s contributions and, therefore, might be considered in the analysis. SBF might assign a weight to each criterion to indicate its level of importance.

  • Low interest rate
  • High payment rate
  • Women working in the organization
  • Reporting to credit bureau
  • Annual or biannual impact assesment report
  • Integral services
  • Skills and Business training
criteria-red

investment criteria

Prior to an SBF investment, each potential investee will be analyzed through SBF’s rigorous due diligence process to ensure the MFI aligns with SBF’s qualitative and quantitative criteria. While each potential investee will be analyzed as a stand-alone entity without regard to parent companies or affiliations, some instances may occur where affiliations can augment the effectiveness of SBF’s contributions and, therefore, might be considered in the analysis. SBF might assign a weight to each criterion to indicate its level of importance.

  • having a defined strategy to meet SBF’s criteria though committed Board members, management and employees who work towards meeting clients’ needs and preferences.
  • The strategy should define social goals, targets and indicators to measure progress.
  • MFI must analyze and report social performance internally and externally.
  • The strategy must contain accurate client data specific to its social goals.
  • Having a sound policy and well-documented process for loan approvals and decision-making using appropriate information and criteria.
  • Having a policy on sustainable target growth rates that considers the provider’s growth capacity, institutional sustainability, and social goals.
  • Having women employees and women in leadership positions. The MFI must provide business and leadership training to its employees which should include training in social and financial responsibilities of the organization.
  • Reporting to the country’s credit bureau or similar borrower monitoring agency.
  • Evaluating potential loans to mitigate client over-indebtedness.
  • Providing competitive loan programs
  • Retention rates are important for SBF to gauge client satisfaction
  • Having a strong financial history including balance sheets and P&Ls, strong management, and corporate governance
  • Hhaving a diversified product base possibly including savings accounts or other products that address client needs and enhance the MFIs performance
  • Offering clients supporting services such as business and financial training
  • Having a track record of high repayment rates. SBF will not lend to MFI’s who have lower than industry repayment rate unless in a conflict area or an MFI that has been affected by a natural disaster or other extraordinary circumstances.

Based on our proprietary asset criteria Seven Bar Foundation will perform annual impact assessment on the MFI, either using SBF’s review process alone or, in the interest of using resources wisely and effectively and where appropriate, using the assessment conducted by other organizations or collaborating with other organizations.

approval-red

Investment Approval Process

SBF Board, or other review committee which SBF might form, will review all proposed investments to ensure they align with SBF’s criteria. The methodology may change from time to time as appropriate and may include the following:

  • Prepare investment package for Investment Committee review by gathering relevant due diligence information through on-site meetings, public information, historic data and projections. Present investment package to the Board and receive feedback – if the Board approves the loan then proceed to closing.
  • If the Board does not approve the proposal then address and review any outstanding issues and present the proposal for review again.
  • If the proposal is rejected a second time then the loans will not be approved.
accountability-red

Accountability

When SBF lends money to its MFI’s, such money is structured as a loan (with a zero interest rate). The reason why SBF doesn’t award traditional grants is because it allows SBF to hold it MFIs accountable.   If a particular MFI is not using the money for authorized purposes, SBF can demand repayment and allocate such moneys to another worthy MFI and its programs.

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