Designing loan products to meet client needs is fundamental to the success of a micro-finance organization. Understanding cash patterns of borrowers and the profitability of their businesses helps to match the loan product to their business cycles. The loan term and repayment frequency are possibly the most significant variables in micro-finance and should be suited to the borrowers' needs. The effect of an increased interest rate on the borrower is relatively less significant than increases in other costs. The method of calculating the interest rate and fees significantly influences the price of the loan.

The objective of this lesson is to highlight the effect of credit on borrower activities. Topics covered include:

  • Cash Patterns
  • Loan Term
  • Loan Utilization
  • Loan Purpose
  • Interest Rate
  • Fees/Service Charges
reviewed & published
Ledgerwood, J.
finance - lesson 1
Agents De Crédit, Gestion Fmi, Donateurs, Taux D'intérêt