EMPOWERING MANY OF LOW AND ORDINARY

YIELDING
Loan Policy and Procedure Manual

1. Background and Vision of EMPLOY Program

Empowerment Program for Local and Ordinary Yielding (EMPLOY) is in the process of
engaging in micro-loan programs with the goal of providing savings and loans to the
vulnerable poor in Liberia. The idea of establishing this program came about through Jill
McClure, an American who visited Liberia in January 2008 after distributing money,
medication, relief items to orphans at the God’s Children Orphanage home and the
visitation of several communities in the Jamaica Road area on Bushrod Island .With so
much passion to make a difference in Liberia and her contribution to the economic
recovery program and poverty reduction initiated by other partners of Liberia, through
Moses S. Forkpah, Jr. ( LIBERIAN) has developed this program to promote grassroots
economic development in Liberia by providing loans to local entrepreneurs to rebuild or
develop local business enterprises. Due to high interest rates and restrictions on loan
recipients, the formal banks in Liberia are not able to offer the poor traditional banking
services. These micro-entrepreneurs will be trained to have the necessary skills,
experience and initiative to manage their own businesses. EMPLOY aims at
enabling/empowering the vulnerable to improve the quality of life of families within
Liberia through credit and saving.

2. General Policy Statement

The purpose of this document is to establish concise guidelines and procedures by which
EMPLOY shall disperse loans. EMPLOY’s Senior Staff will review this policy each calendar year
to provide guidance and recommend and/or approve any changes to this policy.

EMPLOY has a specific mandate in the area of lending to the community which it serves.
EMPLOY staff has the responsibility to serve those not able to access formalized financial
services. At the same time, our responsibilities to these very same clients require us to be
prudent and ensure that EMPLOY is financially sound and stable.

This policy document is designed to provide flexibility as it becomes necessary to modify our
lending strategies in response to an ever-changing economic environment and to the needs of
the clients that we are here to serve. However, EMPLOY will carefully comply with any rules,
laws, or regulations provided by the local government to ensure sound financial practices and the
fair extension of credit.

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3. Actors in Promoting, Tracking and Supervising EMPLOY’s Loans

3.1 General Policy Statements

The following employees play important roles in promoting, tracking, and supervising loans. The
job descriptions described below are by no means comprehensive of all tasks required of the staff
but represent tasks that have direct bearing on functions outlined in this manual.

For ease of operation and financial accountability, at this stage the corporation activities will be
handled / divided into two separate departments: Credit/Finance department and Management
Information Systems (MIS). The Credit/Finance Department disburses loans to Clients and is also
responsible for receiving their repayments. The MIS Officer/ Director of operations records all the
disbursements and repayments and provide information regarding the loan portfolio status.
.

3.2 Finance Department

3.2.1 Director of Finance

The Director of Finance should oversee all of EMPLOY’s financial activities. The following points
outline the primary job responsibilities of the Director of Finance:
• Manages the over-all financial aspect of the institution
• Oversees the importation of all transactions into QuickBooks
• Prepares annual budgets for all activities in conjunction with the Director of Operations
• Informs the Management of any financial change that would affect EMPLOY’s business
activities
• Provides Management with timely, accurate and up-to-date financial reports (monthly,
quarterly, and annually)
• Interprets financial performance of the Institution by submitting accomplished financial
performance indicators and ratio analysis quarterly and as require
• Perform other tasks as may be required by the Executive Director

Provides daily updates to the Director of Finance on the financial status of EMPLOY
• Provide oversee Board with monthly, quarterly, and yearly quantitative data
• Performs other tasks and functions as assigned by the board.
• Receives cash from Clients/solidarity groups on a daily basis with daily spot checks for
accuracy
• Deposit Client repayments (principle, interest, and savings) and withdraw disbursement

Receive repayments (principle, interest, and savings) directly from Clients

• Verify Solidarity Group repayments with daily repayment schedule
• Maintain a record of cash transferred to the Bank

3.2.3 Director of Operations/MIS Officer

The Director of Operations should oversee all of EMPLOY’s credit activities- from the
monitoring of the activities of the various solidarity groups through the loan tracking
system. The following points outline the primary job responsibilities of the Director of
Operations:
• Ensure timely disbursement and repayment of loans.
• Oversees EMPLOY’s portfolio
• Monitors the day to day functions of the MIS system
• From time to time makes necessary revisions in the configurations of EMPLOY’s loan
tracking system

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 • Monitors the flow of information from all solidarity groups.
• Provides oversight to each client.
• Prepares annual budgets for operations and other costs in conjunction with the Director
of Finance
• Prepares and submits monthly and end of period Credit Operation report.
• Prepare long term viability plans (in coordination with the Director of Finance, and
solidarity groups).
• Perform other tasks as may be required by the Director of Finance.
• Assist in the training of new Clients
• Conduct impromptu visits and area surveys in the field
• Spot-check records on Solidarity Groups to ensure accuracy
• Approve Loan applications
• Monitor daily repayments through the MIS reports
• Perform other tasks as may be required
• Organize approved Solidarity Groups into Centers
• Exhibit ethical values that heal relationships or ethnic differences, encouraging a concern
for justice of the oppressed
• Facilitate personal transformation of Clients, Solidarity Groups, and their respective
families and neighborhoods
• Facilitate conflict resolution within Solidarity Groups and/or Centers
• Review weekly/daily collection update in order to detect delinquencies promptly
• Ensure consistency between EMPLOY and Solidarity Group records
• Assist in planning program activities
• Work toward a 100% repayment rate and be responsible to follow-up on every delinquent
loan

4.0 Raising Understanding within the Community about EMPLOY

EMPLOY staff seeks to make many sound and beneficial loans as the Institution’s resources can
handle. They will facilitate informational meetings for communities with a large enough clientele to
support at least solidarity group.

Some advertising may be necessary for these meetings. The staff will make neighborhoods
aware of the meeting and notify those who are eligible to apply.

It is absolutely necessary, that targeted Beneficiary should be in close proximity to the home or
the solidarity group leader. EMPLOY’s lending model necessitates frequent visits to Clients.
These visits help solidarity group leader assess Potential Clients’ needs, track the success of
Clients’ businesses, and bring in missed payments from the field. Close proximity to the home of
the solidarity group leader will save time and money to meet clients on a regular basis.

The leader may suggest that Potential Clients desiring to form a Solidarity Group attend the
meeting together.

4.1 Structuring the Informational Meeting

Solidarity group leader should be present in an advisory role for all such meetings. The primary
responsibility of administrating such meetings should be done by the Director of operations

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although the Director of Finance should ensure that information is communicated in a clear and
accurate manner.

Note: The initial meeting is held at the EMPLOY’S office.

After arriving to the meeting the Potential Clients should receive a brochure outlining the loan
methodology and terms and conditions EMPLOY.

Throughout the meeting the following topics should be addressed:

• What is the role of the Solidarity Group in EMPLOY’s lending methodology?
• What is the role of the Center in EMPLOY’s new lending methodology?
• What is a “Poverty Assessment” and how will it be conducted?
• What are EMPLOY’s loan terms?
• Since loans don’t require collateral, what guarantees does EMPLOY have?
• How are repayments made?
• What happens at a monthly mandatory meeting?
• What happens if a Solidarity Group member defaults?
• How do Clients apply for a second loan?

These questions are expected to be a starting point for the understanding of EMPLOY’s Loan
Methodology.

Potential Clients should have plenty of opportunity to ask questions. The Director of operation
and the Director of finance may answer these questions.

At the end of the meeting the Director of operations will offer interested individuals an application.
The forms will supply EMPLOY with basic information on Potential Clients, and allow the
applicants request a loan amount and to submit a brief business plan. The application will have
spaces for signatures of the other four (4) members of the Solidarity Group.

4.2 Formation of Solidarity Groups and Loan Application

Those who wish to participate with EMPLOY must form Solidarity Group of five (5) members. By
having members self-select, EMPLOY is able to create a group formed on existing network of
peer trust and friendship.

After the informational meeting, Potential Clients are encouraged to form into Solidarity Groups.
Applicants should be encouraged to join with members who are committed to guaranteeing each
other’s loans.

Individuals should carefully fill out the applications and business plan. Each Solidarity Group
member must request the amount for their initial loan, although loans cannot be less than 30 USD
or larger than 70 USD as a start up.

Each group member must submit the EMPLOY simple business plan form, outlining the
business’s projected growth path based on the requested loan amount. All business plans are to
be completed on a form provided to the Solidarity Group by the Director of Operations .
Individuals who require assistance in filling out the application form may ask for assistance from
the rest of the group.

Although the application form and business plan are for individuals, it is important that each
Solidarity Groups member understands how the loans amounts that (s)he is guaranteeing.
Completed applications will have spaces for the signatures for the other four (4) members of the
Solidarity Group. Group members who are unable to sign their name are permitted to use their

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thumb print in place of a signature. Client should understand that by signing application forms
they are entering into a contract with the Solidarity Group and with EMPLOY.

To ensure that the group meets EMPLOY’s poverty criteria, the director of Operations will conduct
a poverty assessment questionnaire with each individual client. The questionnaire will assist
EMPLOY in evaluating the depth of impact in alleviating poverty in Liberia. Visits to the client’s
home and/or business may be necessary to verify information. Although Client visits are time
consuming EMPLOY considers it a necessary expense in the loan application process.

Note: All applications and poverty assessment questionnaires should be completed no more than
three (3) weeks from the time of the initial meeting.

4.3 Loan Approval

After the poverty assessment and business plans are completed the Director of Finance meets
with the Field Agent to assess the viability of each Solidarity Group. Groups should be appraised
on need and the viability of their business plans. Groups that are approved now are eligible to
proceed to the next step in the formation process.

Note: Loan sizes may be adjusted at this time. The Potential Client’s application must be revised
if the loan amount is changed. Group members must re-sign the loan application.

If a Potential Client fails to meet the client criteria set by EMPLOY then the other Solidarity Group
members must find a suitable process. Because the loans are guaranteed by the group, no
member will move forward in this process until all members are approved.

Once the whole Solidarity Group is approved, the Director of Operations will sign the application
and give it to the Director of Finance for review. The Director of Finance must check to confirm
that the EMPLOY has adequate funding for each loan.

4.4 Training of Centers

After clients are approved by EMPLOY, group members begin 7 hours process of training on
savings and loan model in business management.

The main focus of the training meetings should be a comprehensive explanation of the terms and
conditions associated with the savings and loan products. Clients should also have time to ask
questions regarding the repayment process. Repetition may be important aspect of this process.
Two main areas must be discussed in detail:

4.5 Weekly Repayments/compulsory savings at EMPLOY”s Office

During the first training session, each Solidarity Group will democratically elect a Solidarity Group
leader. Leader will make repayments on behalf of the other Solidarity Group members each
week at the EMPLOY Office. The Leader should have a flexible enough business to make all
repayments in a timely manner. Because the leader will be handling repayments on behalf of
other Clients, members should choose leader who is able to handle the responsibility.
. .

4.6 Monthly Meetings

The monthly meeting allows groups to receive specialized training while still employing group
pressure. Client attendance at monthly meetings is absolutely necessary. Monthly meetings are
scheduled to last for one and a half hours.

Training sessions will vary from loan cycle to loan cycle and may include presentations from
external organizations. Training may cover the following but is not limited to the areas of Biblical
values in the marketplace, business development skills, savings and risk management, and
preventative health care.

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While loans are guaranteed at the Solidarity Group level, EMPLOY can still provide an important
group pressure on members. Because the banks are formed from business owners within small
community, members should know which members are making regular repayments and which
members have missed payments. At the monthly meeting the Director of operations will read out
a list of defaulters to the Center. He will keep track of all defaulted loans in his/her loan ledger
book. Employ will decide if it wishes to charge fees, such as a late fees or attendance fees. The
payment of all fines must be managed by the solidarity group leader and not EMPLOY.

Monthly meetings can also provide a time for networking for the office. Clients should be
encouraged to exchange business ideas with other members. Members within solidarity groups
who sell similar products or who use the same raw materials may wish to purchase goods in bulk.

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