Credit and loans for small businesses

Objectives To gain an understanding of a variety of ways of obtaining either credit or loans To establish good practice in record keeping and planning To study the issues involved before establishing either informal savings or credit groups o... More >>

Accountable  responsible or answerable to others.     Advertising  making customers aware of a product.   Aim  broad, long-term, important goal.   Credit  money available as a loan.     Debt  owing money to an individual or bank.   evaluate to ... More >>

Most people have dreams of what they could do if they had enough money. They may dream of how they might use the money to start a small business. How would you use a loan of $50 or of $200?   Discussion  Encourage participants to disc... More >>

Obtaining a loan from a bank is very difficult if you are poor. Officials will need evidence of your skills in reading, writing and managing money. They will also need evidence of how much property you have in case you cannot pay back a loan. Often... More >>

By forming a group, people with no access to outside credit can help each other with credit. A group of about 15 people, meeting regularly, could agree to bring to each meeting either a small amount of money or an agreed amount of crop or fruit pro... More >>

The advantage of groups using this system of revolving credit is that no outside help is needed. They are simple to run and can often be added to the ongoing work of a group such as Mother’s Union, a farmers’ group, a health committee etc. Howeve... More >>

If no outside income is available, small groups can agree to work together to raise income for micro-enterprise (or other purposes). A certain time each week or month or season could be set aside – for example, to grow vegetables, to process foods ... More >>

Savings clubs may encourage members to save a small amount of money regularly to use for a special purpose. Members may all save for the same event, such as making a visit together or establishing an income-generating project. Members may also save... More >>

A Treasurer may have many roles. He or she needs to be: trustworthy able to keep careful records of all money paid in – as contributions, fees or sale of produce, and of all money paid out – as loans, or expenses able to look after the group’... More >>

Study this group’s records. What can you learn about the amounts they have agreed to pay in each week? What happens if members are away? How much do they give out to members each week? Why do you think this is less than the members normally pay i... More >>

Once any group begins to save money, it is important to open a bank account so that the money is kept safe from theft or loss. Two people need to sign each cheque as well as the Treasurer. These people must be able to write their names and must be tr... More >>

When poor people without savings need money quickly, for events such as illness, family funerals or weddings, they usually turn to a local money lender for a loan. Money lenders are usually well known, easy to approach and often do not ask for an... More >>

Groups with a well established savings system may be able to make loans available to members. When loans are made, it is usual to charge interest. Many groups find that 10–15% interest will cover the costs involved. The money raised from interest... More >>

Group meetings, discussion and support can be of great benefit when planning new ways of raising money. A majority of members should approve the idea. Listening to good advice at the beginning is likely to result in successful repayment and increas... More >>

Taking out loans as a group has a lot to recommend it. Each group member is responsible for making sure other members help to repay the loan. If someone does not pay, other members will want to know why. Groups can usually obtain larger loans, maki... More >>

An increasing number of NGOs are able to provide credit for micro-enterprise. If you are fortunate to live near, then you may be able to benefit from their training, advice and credit schemes. Careful, clear records kept by members of revolving l... More >>

Micro-enterprises which supply goods or services that local people need and that have an easily available market, are more likely to be successful. Ideas should be new rather than setting up in competition with existing enterprises. Consider what... More >>

Before supplying products or services, first find out if enough people will want to buy them. Find out what people really think, what they would like and what price they might pay – before you start producing goods. Never make products and then hope ... More >>

The key to success is to understand what customers want and then produce it in ways which allow a good profit to be made. Costs must be measured accurately and should include every part of the business, including borrowing a friend’s vehicle, was... More >>

Once you begin to produce goods, it is very important to check the quality at all stages. Customers will want value for money and will not continue to buy poor quality goods. Make sure that all your workers understand what quality of work is expe... More >>

New products will only sell if customers are aware of them. Think of ways of telling customers. Could you interest market traders to promote your products in a way which also benefits them? Could you use local radio or newspapers? Could you design ... More >>

Most small businesses are run by one person with others helping. Sometimes a product may prove really successful and the business begins to grow. However, it is useful to consider whether this is a good idea. Will the local market be large enough... More >>

Few small businesses start up and are an immediate success. Success may only come through the experience of many failures. Developing new ideas can be painful and many changes may first be required. Always try out new ideas in a small way, preferab... More >>

One group of people within a community who have learnt to work well together can provide a real encouragement for others. Their experience and confidence-building can be shared. People with new skills can train others. They can provide employment... More >>

While the local market should be the first priority, sometimes it is worth considering other markets – either in nearby towns, large cities or overseas. High value, lightweight crafts, good quality dried fruits or unusual food products are all exam... More >>

These Bible studies are designed to use in small groups. They may provide a useful introduction to a meeting where different topics from the Guide are being discussed. Choose a study that will be linked to the topic you plan to study or that is relev... More >>