Microfund for Women: Client Business Evaluation Toolkit

As per Principle 1, Avoidance of Client Over-indebtedness, all financial institutions should carefully establish the borrower’s ability to afford the loan and repay it. Borrowers should be able to handle debt service requirements without sacrificing their basic quality of life. Similarly, the institution takes adequate care that non-credit, financial products (such as insurance) extended to low-income clients are appropriate to their needs and means.

Microfund for Women shared with the Campaign their toolkit for assessing the repayment capacity of individual borrowers. Consisting of a total of four forms including the loan application this toolkit provides credit staff a complete profile of the health of the potential client’s business, and their capacity to take on debt. Importantly, the application form requires loan officers to collect details about the client’s outstanding debts and credit history. Together, these forms help the institution make quality disbursement decisions and minimize the risk of client over-indebtedness.