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Urwego Bank serves people who do not have access to traditional financial services. Motivated by Jesus Christ’s call to serve the poor, Urwego Bank provides loans, savings, and related training that give people the opportunity to transform their lives.
Group lending products are offered to a group of individuals who are economically active but have no access to conventional financial services, primarily due to the lack of credit history and collateral. The beneficiaries of group lending products typically run their own small businesses and repay loans from the sales revenues and/or profits that they earn through business activities.
Sales Staff travel to client’s location to facilitate disbursement and collection of payments. Prior to the approval or disbursement of any Credit Facility, the group beneficiaries are to undertake Pre-Credit Training facilitated by a Sales Officer. The period of training depends on the group, length of sessions, and type of Credit Facility requested.
Available group lending products are as follows:
1.Traditional Community Banking (“TCB”),
2.Advanced Community Banking (“ACB”),
Traditional Community Banking (TCB) Loans.
TCB’s are Urwego’s principle product with self-selected groups ranging from 15 to 69 people. Each loan is secured by the social guarantee that the groups provide. Traditional Community Banking Loans are designed to provide our clients with the working capital necessary for their retail businesses. Pre-Credit Training and continuous loan-long Holistic Life Improvement (HLI) education is a necessity to obtain these loans. This process guarantees that clients get a rigorous training in various business, personal finance and health subjects. Loans can range between RWF 30,000 and RWF 1.5 million, and are repaid over a period of 4 to 6 months during regular group meetings.
Advanced Community Banking (ACB) Loans:
Clients who qualify for ACB loans are those who have successfully graduated from TCB based on their payment record, growth in loan size and growth in business activity. Direct-entry” or new clients are also eligible for ACB loans, but need to have business needs and experience on par with the other ACB group members. Additional requirements, such as a Credit Reference Bureau (CRB) Report and MCC approval, are necessary for direct-entry clients since they have no repayment history with Urwego. Like the TCB loan, the purpose of the Advanced Community Banking loan is to finance the working capital of retail businesses, with the collateral provided by self-selected groups. The loan can be anywhere between RWF 250,000 and 2 million and clients are provided with Pre-Credit Training and HLI education.
The Shelter Financing Credit Facility is an individual loan product to respond to clients’ needs for house renovation, house construction, and the purchase of land. The Shelter Financing loan will be open to new and existing Urwego clients.
- Clients must demonstrate sufficient income and capacity to repay the Shelter Financing loan.
- Clients must present detailed estimates for any work to be done alongside any necessary regulatory permits.
- Clients must open a Urwego account and will be bound to use it for deposit and for the following repayment transfers.
The Shelter Financing Loan is maximum RWF 35 million, to be repaid in a period up to 60 months. All loan proceeds will be transfered to the seller's account when purchasing an asset.
Individual lending products are offered to individuals or businesses that have a reputable credit history, adequate collateral, repayment capacity, business growth needs justifying the larger loan amount, and appropriate business management experience. Individual loans are also extended to gainfully employed individuals to acquire fixed assets, purchase or improve shelter, or for other personal reasons.
Micro Business Loans (MBL):
The MBL product is offered to micro business owners who are (1) considered to have sufficient knowledge and skills in operating their businesses, who (2) have established a sufficient credit history with Urwego or at a different financial institution, and/or (3) can provide collateral to secure the loan.
Urwego may extend an MBL loan to an individual or entity engaged in business activities and considered to have the trustworthy character, repayment capacity, adequate capital, adequate collateral, and creditworthy conditions.
The Micro business Loan ranges between RWF 500,000 and RWF 5 million over a period of up to 2 years.
Small-Medium Enterprise (SME) Loans:
The SME product is offered to entities or micro business owners who are (1) considered to have sufficient knowledge and skills in operating their businesses, who (2) have established a sufficient credit history with Urwego or a different financial institution and (3) can provide collateral to secure the loan.
Urwego may extend an SME loan to an individual or entity, engaged in business activities and considered to have the trustworthy character, repayment capacity, adequate capital, adequate collateral, and creditworthy conditions.
The difference between a MBL and an SME loan is that SME loans are far larger, ranging from RWF 500,001 to RWF 35 million (equivalent). These loans are also set up to 2 years.
The MCL product is offered to individuals who are gainfully employed versus running their own small business.
It is the Urwego’s primary intent to provide loans for working capital purposes. However, there are circumstances where it becomes necessary to provide loans for non-business related purposes (i.e. non-working capital loans). Some loans may be for the purpose of improving the quality of living, funding school fees, etc.
These loans are made to individuals who are gainfully employed and thus have regular income to make loan repayments. In order to be eligible for this loan, clients must prove a stable employment history, justify the purpose of the loan, guarantee repayment capacity, and provide collateral if the loan exceeds RWF 1 million.
A MCL amounts to anywhere up to 33% of gross salary between 1 and 36 months.
Agriculture is affecting approximately 90% of Rwanda’s population. The agricultural sector accounts for approximately 37% of Rwanda’s gross domestic product (2009) and generates 65% of Rwanda’s foreign exchange. Thus, it is very important for Urwego to provide agricultural credit products and services in order to achieve the holistic transformational impact on the rural poor as stipulated in its vision. Agricultural lending will help the rural clients access the capital they need to grow, diversify and ensure their harvest.
Clients eligible for such loans include farmers, cooperatives, cattle herders, crop aggregators, crop distributors, crop importers and exporters, extension service providers (ESPs) and all the value chains related to the agricultural industry.
In principle, Urwego’s agricultural lending for smallholder farmers will be made in the form of group lending. The Cooperative under which the group of farmers are operating should guarantee group loans. In addition, each group/cooperative should show the proof of the contract with the Buyer who will purchase the harvest. Urwego can also issue individual loans to farmers, should they meet the criteria
Each client wishing to take a loan from Urwego is expected to follow Pre-Loan Training sessions. These group sessions are critical in establishing a relationship between our Agricultural Finance Officers and our clients. During the growing season, this relationship will prove critical when the Officers visit the farmers and lend any advice they may require. Further, client training throughout the duration of the loan is an integral part of a successful agriculture microfinance program, enabling adequate teaching in Relationship Building and Finance Literacy and ensuring a Reduced Risk of Default and better Savings.
Group loans will be issued to co-operatives of anywhere between 10 and 50 farmers seeking capital for their activities. Our clients can receive up to USD 50,000 (equivalent) over the course of 1 to 60 months. As stated previously, the collateral is social, meaning that the group as a whole assures the repayment of the loan.
Individual Loans can be issued to individuals with good credit records and sufficient tangible collateral. These loans can vary between USD 50,000 and USD 100 millions (equivalent) over the course of 1 to 60 months.
Urwego's EduFin products seek to improve access to quality education through the provision of flexible financial solutions to parents, students, and private school entrepreneurs. EduFin products will be designed with the following goals in mind:
- Provide opportunity to Urwego clients to send their children to private schools at the primary and secondary level.
- Help group clients expand their portfolios with both business and education loans.
- Initiate equal opportunities for working and non-working students to continue their studies within the higher-education sector.
- Support school management teams across the country to expand classrooms, meet government education requirements, and to make necessary repairs and renovations to increase the school’s educational standards and resources.
- Empower underserved Rwandans to overcome poverty and transform their families for a better future.
- Enable Urwego to promote its vision throughout the country.
School Fee Loan for Trust Groups (GSFL):
GSFL loans are added on top of an existing trust group business (working capital) loan. Loan disbursements are made directly to the approved school’s account and then repaid by the client alongside his/her existing trust group loan (at the same interval). This service is accessible to any client undergoing trust group training or with a positive record at Urwego. They may use this loan to benefit their children going to primary or secondary schools (private and public).
The GSFL loan amounts to between RWF 30,000 and 100% of the tuition fee and related expenses (such as school dinners). This amount may change in accordance with further children reaching schooling age.
This loan comes with no processing fee, collateral or insurance payments and may last for the duration of the school period particular to the student.
Individual School Fee Loan (ISFL):
An individual loan made to parents or guardians interested in sending one or more children to a private school or to college. Parents or guardians must be gainfully employed or have a predictable source of income. In the case of ISFL loans for college tuition, the client can be the student, if he/she is gainfully employed or has a predictable source of income. The ISFL loan covers up to 100% of tuition fees and is disbursed directly to the school on behalf of the client.
Kiva is the official source of capital for the ISFL product.
The ISFL loan amounts to 100% of the tuition fee and any related expense payable directly to the schools. The loan shall match the duration of the school period of the particular student and must be repaid monthly.
School Improvement Loan (SIL):
The School Improvement Loan (SIL) is a product dedicated to support low-income, private school entrepreneurs struggling to provide quality education, and in need of a loan to finance their education activities and/or renovations. Potential clients are first identified by recommendations from churches and other organizations as strong potential partners. Potential clients are also identified from school visits done by the EduFin Team.
The SIL loan may amount to between RWF 500,00 and 100 million. The school permises must possess fire insurance, while the owners are required to have life insurance and provide physical collateral. The loan term must be at least 3 months and cannot exceed 5 years and must be repaid monthly.