Eligibility Requirements, A Performance Perspective

It has been frustrating for Russell and I to find metrics to screen potential clients, which will be evident in our Thursday presentation. The only data we felt we could successfully use to compare clients of varying loan size and repayments schedule was the difference between the date due and the date paid for each payment, then an average for each whole loan. From this, we were hoping to do two things:

-Find a clients “upper threshold,” in other words, find out at what amount it became difficult for a client to pay back and possibly cap that client at that point until performance increased. This isn’t meant to limit available capital for any other reason besides not burdening a client with an amount that is too large. This might sound sort of confusing, it’ll be explained in further detail Thursday.

-Be able to report to La Ceiba as a whole a list of potential defaults. If we categorized clients based on repayment data, sorted to only show loans that were still active, and further sorted to find payments due past the acceptable limit, we could share this information with the right people so during CCC sessions they could ask clients for more info (was there some sort of emergency, etc.)

Now, both of these don’t really address the issue at hand, which is eligibility requirements for the first loan, whereas our recent efforts have focused on metrics for subsequent loans. On the initial loans, it seems difficult to muster requirements and some may seem counter-productive if our goals are to help the poorest of the poor. I am not certain, and I meant to ask today, if we force clients to abide by the loan ladder, in such a way that they must take each loan amount in sequence, first $25, then $50, then $75, … , then $150 (Not sure on the amounts, but you get the idea). If the Personal Loan Program were to utilize these two methods (the capping of clients, will be explained further on Thursday and the forcing of the ladder, if it isn’t already policy) along with the $150 cap would I feel, adequately alleviate risk (which is the reason for creating eligibility requirements) without denying anyone the opportunity to receive their first loan (which we’d have to do with more stringent requirements on initial loan disbursement)

We’ve run into some difficulties with this scheme thus far, so we’re looking forward to input in Thursdays presentation. We’ve come to some pretty interesting conclusions, here is a teaser: Right now we do some things because we think they are the right things to do. I can show that they are the right things to do. Exited yet?