OPTION A

• All selected beneficiaries are expected to open account with the bank through which the fund will be disbursed.
• Government will propose the interest rate to be charged which should be low
• Retention of 10% of the loan amount as seed deposit in the beneficiaries account with MAXITRUST MICROFINANCE BANK LTD
• MINISTRY OF SUSTAINABLE DEVELOPMENT to pay 15% of  total loan volume to be disbursed as management fee to MAXITRUST MICROFINANCE BANK LTD
• MAXITRUST MICROFINANCE to monitor and recover in full all loan disbursed.
• Ministry of sustainable development to guarantee all nominated beneficiaries, although individual guarantor will be provided by all borrowers
• Loan amount to be determined by the type of business as agreed Ministry of sustainable development.
• Loan duration to be determined by type of business as agreed by ministry of sustainable development
• Purpose of the loan should be strictly for commercial purposes and not Agric related.
• Programme duration should be minimum of one year (1 Year)
• Quarterly reporting of programmes performance to Ministry of sustainable development
• Recommended state award programme for performing beneficiaries
• Loan types should be for – new business start up, business expansion by individuals, peer groups and or cooperatives

OPTION B

• All selected beneficiaries expected to open an account with the bank through which the fund will be disbursed.
• Agreed interest rate lower than the prevailing market rate.
• Ministry of Sustainable development to provide an agreed percentage of total fund as take-off grant cover for logistics reporting and management to MAXITRUST MICROFINANCE BANK LTD.
• Retention of 10% of the loan amount as agreed deposit in the beneficiaries account MAXITRUST MICROFINACE BANK LTD.
• MAXITRUST MICROFINACE BANK LTD to screen all nominated beneficiaries by Ministry of sustainable development.
• MAXITRUST MICROFINANCE BANK LTD to request guarantors from all beneficiaries as the last option for loan repayment in case of default.
• MAXITRUST MICROFINACE BANK LTD to take full responsibility of 100% of loan repayment.
• All accrued interest on loan to go MAXITRUST BANK LTD.
• Loan amount to be determine by type of business as agreed by Ministry of sustainable development
• Loan duration also to be determined by type of business as agreed by Ministry of Commerce
• Purpose of the loan should be strictly for commercial purposes and not for sustenance basis.
• Programme duration should be for a minimum of one year (1 Year)
• Quarterly reporting of programme performance to ministry of sustainable development
• Recommend state award programme for performing beneficiaries
• Loan types should be for – new business start up, business expansion by individuals, peer groups or cooperatives.

LOAN MANAGEMENT STRATEGY
In line with the our aims and objectives, we propose the following structures for the loans to ensure optimal loan recovery rates (98%), business success for the beneficiaries and wealth creation for the state.
           
Make Initial loans small: New clients typically lack the experience in managing debt and a large loan may bring on business failure.
Match loan sizes to economic conditions: Loans will be based on market research and considering the average income level and prior borrowing of prospective clients.
Establish uniform loan cycles for each group: All members of a group should be on one loan cycle of either 3 or 6 months though different groups may be open different cycles. Disbursement will be made at one time.
Members of the group guarantee each others loans: If one person is behind on a loan no one else can borrow any more money. To resolve this problem, the group may resolve to pay the overdue loan out of their own pockets.
Match loan cycles to economic conditions: Loan cycles for clients operating in urban areas may be short (3 to 6 months) to accommodate the working capital needs of street vendors and home based manufacturers.
Keep the loan payments simple: Clients can better understand and staff can more effectively monitor loans with simple payments.
Create incentives for clients. Rewards should be offered for good performance by allowing larger loans; a common feature in all microfinance programmes.

Charge a flat interest rate: For the purpose of simplicity, and efficiency, we suggest that the interest be calculated on a flat rate. A flat rate calculates interest on the original
Loan Amount. In normal banking, interest rates are calculated on the basis of a declining principal balance and equal payments are carefully differentiated between principal and interest, which are different amounts for a period.
Require clients to make frequent, regular loan payments: Payments should be made weekly, bi-weekly or monthly.
Requirement of indigenes as field Managers in rural areas: To enable the bank to monitor and manage its loans properly, the indigenes of any community where the bank is established and micro credit is advance, will be employed and used for reasons of familiarity in language geographical area with the beneficiaries.