Untitled Document

Policies

Approved Lending Agency (ALA) Accreditation

The community Development Funds (CDF) must include the following documents in their request for accreditation by MIDA:

1.	Provident Society Registration Certificate
2.	Financial Statements - Balance sheet, Profit and Loss
3.	Profile on Board Members
4.	History of the Organization
5.	Loan Policy Document
6.	CDF Personnel
7.	Location of the CDF

Disbursement Process
The relevant legal documentation must be prepared and signed before the disbursement is made. (See Legal Documentation)

The cheque must be made payable to the supplier(s). The Management of the CDF may apply his/her discretion where this is necessary. A contact may be made with the supplier to determine availability and cost of the item(s) prior to disbursement. Where there is a minimal increase the loan amount may be adjusted provided that it will not affect the viability of the project.

Loan Policy of the Community Development Fund

1.	Borrowers must be members of the CDF through the purchase of up to a maximum of 80 shares at $5.00 per share.
2.	Borrowers must be savers in an affiliated Community Revolving Fund.
3.	Borrowers must be Jamaican and at least 18 years of age, who will personally execute the project. The majority of their income should come from the project.
4.	Loans may be made for projects in agriculture, manufacturing, services and any other economically viable project.
5.	Loans may be made to individuals or groups. Maximum for individuals being $100.000.00 and for groups (3 or more persons) and companies (3 or more shareholders) $250.000.00. A waiver may be applied subject to approval of MIDA.
6.	Collateral should be security deposit of at least 25% of the loan amount and shares in the CDF as well as any of the following amounting to the value of the loan.

a.	Bill of Sales on machinery, equipment or household asset not previously assigned.
b.	Hypothecation of Bank Deposits
c.	Cash surrender value on Insurance Policies (Value of proof required)
d.	Land title
e.	Motor vehicle, which should be comprehensively insured
f.	Guarantors offering any of the above
g.	Hypothecation of co-member's fund
h.	Crop lien

7.	The interest rate should not exceed 23% on the reducing balance per annum.
8.	All loans must be approved by the Credit Committee
9.	Business assets should not exceed $600.000.00, excluding land and building

monitoring

A post implementation visit must be made within one (1) week of disbursement. This visit should achieve the following:

    1. Verification of purchases
    2. Verification of receipts
    3. Checking of the record keeping system

Regular monitoring visits should be made to ascertain progress of the business. The officer is authorized to collect loan repayments at this time if necessary.

*Borrowers' Files
All visits communication must be noted on borrowers' file.

The Credit Committee

The Credit Committee should consist of five (5) persons with three (3) being required for a quorum. The group should include at least two (2) persons from the CDF Management Committee including a representative from each CRF and at least two (2) persons from outside the organization. These persons should be capable of assessing the project based on the information presented.

A Chairman should be selected from the group.
The individual projects must be objectively discussed and evaluated in terms of:

1.	Viability including liquidity and profitability
2.	Potential for Growth
3.	Industry potential including competition
4.	Employment generation
5.	Collateral
6.	Environment impact

The Credit Process

First Interview
The CDF Officer must explain the nature and policy of the organization to the prospective client at the first interview. He/she should discuss the loan request with the client to ascertain whether the person/project is eligible for a CDF loan. The client must become a member, before any loan can be considered and should be asked to supply the following information:

1.	Performa Invoices
2.	Recommendations
3.	Proof of income/expenditure (for existing business)
4.	Any available business records.
5.	Photographs (certified)
6.	Record of savings with the CRF
7.	List of security items or letter from guarantor
8.	TRN must be submitted and noted on application

Second Interview
T his involves:

1.	The collection and perusal of documents.
2.	Completion of loans forms
3.	Arrangement of site visit and training
4.	Costing where relevant.

Recommendations and invoices may be verified at this stage

Site Visit

The Site visit should address the following:

-	Verification of Addresses
-	Assessing suitability of location for project including security.
-	Inspection of items offered for collateral including serial number, and model number and checking of receipts
-	Inspection of business assets with a view to assessing suitability and capacity
-	Assessment of skills

Project Documentation
The proposal may be prepared based on documents submitted, client information and site visits. The Credit Evaluation form can be completed at this stage. The project must score at 50%in specified areas on the Credit Evaluation Form in order for it to be approved.

Approval
An executive summary of the loan proposal should be circulated to members of the Credit Committee before the scheduled meeting. The proposal should be discussed and duly approved, deferred or declined

The borrower should be informed of the decision in writing and discussion should be held where relevant.

Revised Approved Pipeline Project Schedule

Approved loans must be submitted on the Revised Approved Pipeline Project Schedule when requesting loans from MIDA, together with the appropriate 25% Security Deposit

*Disbursement Listing
When the CDF has disbursed loans to borrowers, a Disbursement Listing must be submitted to MIDA.

Training

All clients must attend a training session in which the under mentioned areas covered. This may be before or after approval but must be prior to disbursement.

1.	Small Business Management
2.	Marketing
3.	Record Keeping
4.	Responsibilities to the CDF

There is also room for initiative in organizing training session for clients and non-clients in other subject areas as the need arises.

Assistance may be sought from MIDA and other support agencies.