WMI LOAN PROGRAM BANKING MANUAL

(1)

WMI LOAN PROGRAM

BANKING MANUAL

Prepared by:

Bulambuli Widow’s Association Postbank Uganda

Women’s Microfinance Initiative

Montana Stevenson, project director Ainsley Morris, Assistant project director

(2)

INTRODUCTION

Welcome to the Women’s Microfinance Initiative Loan Program!

By joining the Women’s Microfinance Initiative (WMI) you are taking a big step. You are putting yourself on the path to financial independence. You are joining thousands of other women who are making a better life for themselves and their families by starting and operating businesses.

The WMI loan program will introduce you to business skills and good credit practices. You will join a color group of 20 like-minded businesswomen. These women will form your support network. You can talk to them about business challenges and goals and even family problems. As a group you will be responsible for one another’s loans. It is important that you attend support group meetings, ask for advice, and reach out to others in your group.

After two years of borrowing through the Bulambuli Widow’s Association (BWA), you will be able to move on to a transition loan issued by Postbank Uganda. This is a special program that PostBank only offers to BWA clients. WMI/BWA will guarantee your loan for one year. From your transition loan, you can then graduate to an independent loan from Postbank.

The WMI loan program wants to give as many women as possible a chance to get a loan, training and support so that they can become successful business owners. That is why WMI graduates borrowers to independent loans. Loan money from a graduating borrower can then be used to fund a loan for a new borrower and get another rural woman started down the path to business ownership and management.

(3)

DEFINITIONS

Asset: An item of value, owned by an individual or family, which could be sold for cash. Cows, homes, machines, and land are assets.

ATM: Automated Teller Machines or ATMs are machines belonging to bank that enable you to withdraw money or check the balance on your bank account. For a fee, PostBank will offer you an ATM card. You can use your ATM card to get money out of the machine instead of going into the bank. Your ATM card is connected

electronically to your bank account. When you withdraw from an ATM, your bank account will automatically be debited.

Bank Account: A place at the bank where you can keep your money. The bank records the amount of money that you put in and take out. There are many different kinds of accounts – some are used for making loan payments, while others are used for saving money.

Business Expenses: The amount of money spent to run your business, including buying stock, paying rent, or paying for transportation. Please note personal expenses are NOT business expenses.

Business Income: The amount of money that your business gets from selling goods or services.

Capital: Money used to start or expand a business.

Cash Flow: The amount of money that goes through your business, including money that comes in as business income and money that goes out to pay for business

expenses. Your business could have lots of cash flow but no profit if business income is equal to business expenses.

Cash Poor: When you have stock or other assets, but no paper money or coins.

Credit: Money that you borrow and promise to pay back later.

Deposit: Money that you put in the bank.

Economy: The production, exchange, distribution and consumption of goods. For example, the economy of Buyobo is all of the goods that are made by, consumed by and exchanged between people in Buyobo.

Entrepreneur: Someone who starts a business and manages it herself.

Fixed Assets: Items that are used in a business to produce the goods or services that you want to sell to your customer. These items are purchased once and used over and over again, like a sewing machine.

(6)

“Formal Banking Sector or Institutional Banking”: Those banks and their

branches that are registered with the government and the Bank of Uganda. They must follow Uganda Banking Laws. In Uganda this would include Postbank Uganda, Stanbic Bank, Barclays Bank, Crane Bank, Pride Microfinance, FINCA, Opportunity Uganda, etc.

Informal Banking Sector: Groups offering loans that are not registered with the government and do not have to follow Uganda Banking Laws, like BWA. These types of institutions usually cannot take deposits.

Interest: The cost of borrowing money. It is the amount the bank charges you for borrowing money. It is also the amount the bank pays you when they lend out money that you put in the bank as a savings deposit.

Inventory or stock: Goods that you have bought, made, or taken from your garden and intend to sell. Inventory or stock is also an asset because it is something you own that is valuable and you can sell it in exchange for cash.

Money-lenders: People that give out loans, often at very high interest rates. These people often lend very informally without loan agreements.

Profit: Business income minus business expenses.

Revolving Loan Fund: A fixed amount of money that is used over and over again to make loans. When a borrower repays her loan, the money is re-lent to either the same person or a new borrower.

Savings: Money that is put aside for future use. This can either be in a bank account or in the form of an investment, such as a cow (which is also an asset!).

Withdrawal: Money that you take out from your account at the bank.

ACRONYMS (NICKNAMES)

BWA – Bulambuli Widow’s Association CRB- Credit Reference Bureau

CBO – Community Based Organization PBU – Postbank Uganda

(7)

SECTION I: INTRODUCTION TO BORROWING

1. Banks

What is a bank?

A bank is a business that…

- Provides customers with a safe place to keep their money. - Pays customers interest on the money they deposit at the bank. - Lends money to customers at an interest rate.

What do banks do?

A bank is an institution that offers its customers loans and also keeps its customers’ savings for safekeeping as a deposit.

For every customer the bank offers a bank account where you can deposit your savings and another where you can pay back the loan that you borrow.

Banks lend the savings that people deposit to other customers at the bank. The bank charges an interest rate when it lends money.

Banks pay some of the interest they earn on loans to customers who deposit money. Banks keep the rest to cover their expenses and to earn a profit.

You place a deposit in the bank.

The bank lends your deposit to another

client.

The client repays the loan plus

interest.

The bank keeps some of the interest to cover

expenses and some as profit. The bank returns

your deposit and pays you interest on your

(8)

The amount of interest a bank pays you on your deposit in a savings account is

always less than the amount of interest they charge on a loan.

The bank pays you interest on your savings account because they are able to use the money you have deposited to make loans. The interest is the way the bank pays you for the use of that money.

Is your money safe in a bank?

Don’t Worry! Uganda’s Banking Laws require PostBank to put money in the Bank of Uganda as an insurance policy. In case PBU does not have your money when you need to withdraw it, they can get the money from the Bank of Uganda. Savings deposits are guaranteed up to 3 million UGX by the Ugandan government. The Bank of Uganda supervises PostBank to make sure it keeps enough money to pay back its depositors.

2. PostBank Uganda

Why are there so few banks in rural areas?

It costs a lot of money to set up a bank branch. A bank branch needs: - A really, really safe building.

- Lots of workers.

- Full-time security guards. - Lots of computers.

Because setting up a branch is expensive, banks only set up branches where they know they can get many customers.

Banks want to make money. In rural areas where there are fewer businesses, a bank would find it difficult to make enough money to cover its costs.

PostBank wants to make a profit, but it also has a mission to make banking services more readily available to all of Uganda’s citizens.

PostBank uses mobile banking vans to serve rural customers. The vansallow the bank to provide savings and credit services without a permanent branch.

(9)

On loan payment days, the PBU van assists BWA borrowers.

Banks, like Postbank, are trying to provide better banking services in rural areas without building a full service office. Some ideas include:

- A bank branch in a rural area that is open only in the morning, meaning fewer staff and less electricity use. Customers would have daily access to banking services, instead of once every two weeks through the van. - A Point of Sale Terminal. This terminal is similar to an ATM. You can

make withdrawals, but you cannot make deposits and there is no one available to assist you if you have a problem.

3

3 . W M I L o a n P r o g r a m

How is WMI different from a bank?

WMI is a non-profit organization in the United States that makes grants to women’s groups in villages in East Africa to start loan programs. It started working with the Bulambuli Widow’s Association in Buyobo in 2008.

The grant money WMI gives to BWA comes from donations. WMI volunteers work hard holding fundraisers to get donations that are used to provide loans.

WMI has only a limited amount of funds to give out in grants.

BWA does collect savings, but it deposits those savings in an account at PostBank and does not use those savings to make loans.

(10)

4

4 . B W A

What does BWA do?

BWA acts as the first step towards dealing with a bank

BWA provides small business loans to women who have never had access to a loan. BWA also provides business training and a support network to help you become a successful entrepreneur.

After 2 years of borrowing experience with loans from BWA, borrowers have to move on to borrowing from a bank. After a borrower moves on to a bank loan, BWA can use the money that was funding her loan to offer a loan to a new borrower. That’s why BWA made a partnership with PostBank.

Unlike BWA, PostBank does not have a limited amount of money to issue loans. Postbank has the funds to offer borrowers larger loans for longer terms. If BWA offered borrowers ongoing loans forever, then no new borrowers could ever join BWA because old borrowers would be using up all of the funds.

BWA has a revolving loan fund and the money is lent out continuously. The people BWA lends the money to change. As more experienced borrowers graduate and get loans from PBU, BWA can serve new, inexperienced borrowers and begin preparing them for future bank loans.

(11)

attend training sessions, keep your books, and work hard in your business so that after three years you will feel ready to manage an independent loan.

How does BWA work with WMI?

BWA is a non-profit, Community Based Organization (CBO) with a mission to help women, including providing them with loans to start or expand businesses.

BWA uses the grants from WMI to make loans.

The interest that BWA charges on loans does not get paid to a bank.

BWA uses the interest it makes from loans to pay the costs of running the loan program. It provides extra services to borrowers, like training, graduation ceremonies and gifts, and setting up a Transition to Independent Banking Program with PostBank.

5 . C r e d i t

Why is Credit Important to a Business?

Credit is money you borrow with a promise to pay it back later.

Credit is a way to get enough money to buy what you need to start a business.

Credit is also a way you can grow your business:

- If you spend all your weekly business profits on household expenses, you will never have extra money to invest in your business.

- With credit you can buy more inventory. With the larger profits you will get from turning over more inventory, you can pay back your loan and you will have grown your business.

(12)

- Credit is a way to get enough cash to buy an expensive fixed asset like a sewing machine to expand your business. It is hard and it takes a long time to save enough money to buy something that is expensive. But if you can use the item you buy to make more money, then you can pay back the loan and increase your profit.

Credit makes you work hard in your business and think carefully about how you spend your money because you know you must pay back your loan.

Credit is a way to fix cash flow problems in your business:

- Your business may have a lot of stock, like beans, but you are waiting for the price to go up before you sell. This causes a cash flow problem because no cash is flowing through your business. You have no money to buy other goods to sell while you wait for the price of beans to go up. Although you have an asset in the beans – you are “cash poor.”

- A loan can get you enough money to buy used clothes, or other goods to sell and make a profit while you wait for the price of beans to go up.

Before you take a loan make sure there is a market for the things you are planning to sell once you have more capital!

Do not use business loans to buy consumer goods! Do not take out a loan to pay off another loan!

If you are having problems with your business and think you might not be able to pay back your loan, speak to your local coordinator or bank officer immediately!

(13)

!".0&+++ " %! %!(! !%.! % ,+&+++ % & 0&+++( ! ,0&+++ !" /0&+++( %!5 ' !",+&+++ 5 &! # %!" % %!! $' '1&+++ #'-&+++ '-&+++ !"% " " $%! !%! !* #) ! -++&+++ ,+3 #"-.0&+++ " %! %!(! !%--! % ,+&+++ % & ,0&+++( --!4--+&+++ 4,0&+++ $4-.0&+++ ! ,0&+++ !" ..+&+++ ( %!5 ' !"20&+++ 5 &! %! "! $' '1&+++ #'-&+++ '-&+++ %'--&+++ !#"1.&+++ " " $%! !)

(14)

6

6 . N e e d f o r a l o a n When should I get a business loan?

1. To start a business, or

2. To make a small business bigger and increase sales.

Loan capital allows you to purchase fixed assets or trade in higher volume.

Before you get a loan, make a plan of how you will use the loan for your business and how it will help you make more money.

This business plan is your road map to success. Write it down!

Your business plan should show:

1. How you will spend your loan money 2. Estimated income

3. Estimated expenses 4. Estimated profits

5. How you will repay the loan from your profits

6. Extra money leftover that you can save or use to expand your business

Put the whole picture together

1. Examine your business plan carefully.

2. Make sure that it works next week, next month and next year. 3. Make sure it works for the entire time you have a loan. 4. Make sure it works in high season and low season. 5. Make plans for emergencies.

o If you get sick, how will you pay the loan?

o Make sure you save to help when you have an emergency.

6. Think about each loan repayment. Do they occur once a month? Every two weeks?

o Will there be times when it will be difficult to make the payments because of the season? How will you prepare for those times?

(15)

Make a schedule

1. Estimate timelines for your business

o When is the best time to make purchases? o When is the best time to sell your products?

2. If there is a lag between when you buy and sell, make sure that you have money in savings so you can cover your loan payments.

3. Know what times of year are expensive and put a strain on family finances, like when school fees are due and Christmas spending. Make sure you set aside money in advance for your loan payments.

Businesses often need credit but be smart about how you use it. - Do not get a loan if you cannot use it in your business.

- Do not get a loan if you do not have a good plan for how it will help your business to make more money.

- Never use abusinessloan to buy things for yourself or your household. Think about the future

- What is the best use of your assets (things you have like money) to generate income?

- What are the best ways to use the profits to grow your business?

o Do you save up for a motorbike, which brings good daily profits? o Or, does your business already bring good daily profits, so your

(16)

(17)

7

7 . S a v i n g s

Why are Savings Important to a Business?

Regular savings protect you against disasters and unforeseen expenses.

Having money in savings means that you will not have to make sacrifices to pay for family emergencies.

With regular savings you build up your capital and can grow your business. You can use your savings to make a purchase to enhance your business and

increase sales.

When you graduate to independent borrowing you will be required to put a deposit down to get your loan. Start saving for the deposit now!

(18)

SECTION II: STEPS IN THE WMI TRANSITION TO

INDEPENDENCE PROGRAM

5 STEPS TO FINANCIAL INDEPENDENCE

STEP 1 (Months 1 – 18)

Borrowers are eligible for loans of 100,000, 200,000 or 300,000 UGX issued by BWA for 6-month terms. (Loans 1, 2 and 3)

STEP 2 (Months 18-24)

Borrowers are eligible for a loan of up to 500,000 UGX issued by BWA for a 6-month term. (Loan 4)

STEP 3 (Months 24-36; Year 3)

Borrowers are eligible for a loan of up to 1 million UGX issued by Postbank for a 1-year term. This loan is guaranteed 100% by WMI/BWA. (Loan 5)

STEP 4 (Months 36-48; Year 4)

Borrowers are eligible for a loan of up to 2 million UGX issued by PostBank for a 1-year term. This loan is partially secured by a combination of borrower’s deposit, borrower’s chattels and an 11% guarantee from WMI/BWA. (Loan 6)

STEP 5 (Months 48-60; Year 5)

Borrowers are eligible for a loan of up to 5 million UGX issued by PostBank for a 1-year term. This loan is secured by a combination of borrower deposit and chattels. There is no guarantee from WMI/BWA. (Loan 7)

(19)

SECTION III: BWA LOANS (STEPS 1 & 2)

STEP 1

Loan Amount: During the first 18 months in the BWA Loan Program you are eligible for loans of 100,000 or 200,000 or 300,000 UGX.

Loan Term: BWA loans have a 6-month term.

Loan Interest Rate: 10% flat interest rate over the 6 months.

Loan Payments: Payments are made once a month for the first 2 months and every 2 weeks for the following 4 months.

Security: Solidarity groups of 20 women are formed and assigned a color to identify them. Color group members cross-guarantee each other’s loans. This means all members of a color group are liable for the loans of the others in their group if any of them default.

Collateral: None. Deposit: None.

Loan Payments: Each color group meets every two weeks, makes payments together at the WMI building, and is organized by a Local Coordinator.

Follow Up: The Local Coordinator visits borrowers’ businesses on a rotating basis and writes reports for BWA about how the members are doing. The Local Coordinator focuses on certain topics including: bookkeeping, family involvement, health, and business challenges.

Training: As a group, members attend a business training conducted by BWA. Additional Loans: Borrowers who successfully repay their loans are guaranteed

follow-up loans.

STEP 2

After successfully repaying the first 3 loan cycles over the course of 18 months, you are given the opportunity to take a larger loan.

You are able to get a loan of up to 500,000 UGX for another 6-month term. All of the other requirements and procedures remain the same.

(20)

SECTION IV: TRANSITION TO INDEPENDENCE (STEP 3)

You have now been in the BWA Loan Program for 2 years. BWA has issued you four, 6-month loans. You have successfully repaid them all. Your last loan was 500,000 UGX. It is now time to take the next step in the transition to the formal banking sector.

STEP 3

1

1 . G u a r a n t e e d P o s t B a n k L o a n F e a t u r e s

Loan Amount: PBU Transition loans can be 500,000 UGX or 1 million UGX. Loan Term: PBU loans carry a term of 1 year.

Loan Interest Rate: 18% Declining Balance Interest. Security: BWA and WMI guarantee the loan 100%. Collateral: None.

Deposit: None.

Loan Payments: 12 equal monthly payments. Requirements:

- Written Recommendation from BWA.

- 250,000 UGX per month in Household Income.

- Spouse must sign as guarantor. If not married or not living with spouse, next of kin must sign as guarantor.

- Borrower opens an account at PostBank.

- Borrower agrees to pay a 5,000 UGX monthly service fee to BWA. Additional Loans: Borrowers who repay their loans graduate to independent

borrowing with PostBank.

2 . H o w d o I q u a l i f y f o r a G u a r a n t e e d l o a n ? To get a Guaranteed PBU loan you must do the following:

1. Participate in the BWA loan program for 24 months (2 years), which means repaying four, 6-month loans at 10% interest without default; 2. Keep your books the entire time you have a BWA loan;

3. Show the BWA Director, or the Local Coordinator who visits you, that you have a business and that you are using your loan monies to expand that business;

4. Be recommended by the BWA credit committee for the Guaranteed PBU loan.

(21)

3

3 . P r o c e s s t o g e t a g u a r a n t e e d l o a n

The BWA credit committee evaluates members who want to get a guaranteed loan and signs a form recommending you to PBU as a good borrower.

You must present ID to the PBU staff to open an account or apply for a loan. You can use a voter’s card, a passport, or a borrower ID card made in Mbale. You must complete the required forms and pay all necessary fees.

4 . W h a t f o r m s m u s t b e c o m p l e t e d ?

Complete these forms for your PBU loan at the BWA Building:

1. Application to Open a PBU Bank Account

o To get a PBU loan, you must have a Personal Account at PBU. This is a transactional account from which PBU will automatically deduct your loan payments each month. It is not a savings account. PBU Savings Accounts do not carry monthly fees like Personal Accounts, but you cannot use a Savings Account to make loan payments.

2. Signature Card (plus 4 small headshot photographs)

o This is part of the process for opening a bank account.

3. PBU Loan Application

4. PBU Loan Application Fee Form

o You must sign this form giving PBU permission to deduct the 10,000 UGX application fee from your Personal Account.

5. Guarantee and Undertaking (Guarantor) Form

o Your husband, or if not living with him, your next-of-kin, will have to sign this form saying they promise to guarantee your loan. This must be signed in the presence of a PBU loan officer.

6. “Quick Cash ATM Card” Application Form

o This form is optional. If you would like to receive an ATM card for your PBU account, you must fill it out. The fee for the ATM card is 10,000 UGX.

7. Two Internal Standing Orders

o The first one allows PBU to automatically deduct the monthly loan payment from your account.

o The second one allows PBU to transfer 5,000 UGX a month to the BWA account to cover the BWA Service Fee.

Once you have been approved for a PBU loan, you go to PBU in Mbale to fill these final forms and receive your loan:

8. Credit Reference Bureau (CRB) Card Application

o To get a loan from PBU you must register with the Credit Reference Bureau. The CRB tracks all loans you take from formal banking institutions. You will be fingerprinted as part of the registration process.

(22)

9. Letter of Loan Offer

o This is the same as a loan agreement. You must sign it before you receive your loan.

You should receive a Payment Schedule, which shows the dates on which you are to make your loan payments and the amounts of each payment.

***SSEE APPENDIX V FOR COPIES OF THE FORMS TO FILL*** 5 . F e e S c h e d u l e F o r a G u a r a n t e e d l o a n

Minimum Balance on Personal Account 5,000 UGX Loan Application Fee 10,000 UGX

Insurance Fee 10,000 UGX (1% of a 1 million UGX loan)

Credit Reference Bureau Card Fee 7,500 UGX

Optional ATM Card Fee 10,000 UGX

EXAMPLE:

If you get a 1 million UGX guaranteed loan and do not already have a PBU account opened, then this is how much you will pay and what your loan amount will be:

Initial Loan Amount 1,000,000

FEE

-5,000 Minimum Account Balance -10,000 Loan Application Fee -10,000 Insurance Fee -7,500 CRB Card

New Loan Amount 967,500

With ATM Card

-10,000 ATM Card

New Loan Amount 957,500

*** SEE APPENDIX I FOR AN EXPLANATION OF THE FEES***

The loan fees apply only once when you get your Guaranteed loan from PBU. If you do not want to pay these fees from your loan, you can deposit the money

in your Personal Account and PBU will deduct that money to pay the fees. If you put money in the account and use it to pay the fees, then the loan amount

(23)

6

6 . M o n t h l y F e e s f o r Y o u r G u a r a n t e e d L o a n

In addition to the loan fees that you pay once, there are monthly fees for your PBU account and for the guarantee.

2,300 UGX: Monthly PBU Bank Account Maintenance Fee o PBU charges this fee to maintain your Personal Account. 5,000 UGX: BWA Service Fee

o BWA charges this fee to provide the collection services and to guarantee your 1 million UGX loan from PostBank.

There are no monthly fees for a Save-As-You-Earn Account! This type of account is PBU’s version of a Savings Account.

***CONGRATULATIONS! YOU NOW HAVE YOUR LOAN!***

7 . L o a n p a y m e n t s c h e d u l e a n d a m o u n t s

Payments of 100,000 UGX are made every month for 1 year (12 months). The payment is broken down in the following way:

Monthly Loan Installment 91,680

PBU Account Maintenance Fee 2,300

BWA Service Fee 5,000

Remains in account (savings) 1,020

100,000

The PBU Van comes to collect payments on the first Saturday of each month. Borrowers meet with their color groups to make the payments and group

leaders fill out BWA Repayment Registers.

The Repayment Registers are given to PBU along with deposit slips for each borrower who makes a payment.

- The borrower gets a copy of the deposit slip after it is stamped by PBU.

- It is very important to keep this slip – it is the only way to prove you made a deposit if your money is accidentally put on the wrong account.

- Mistakes happen. Keep your deposit slips at home in a safe place.

(24)

When the van returns to Mbale it deposits your 100,000 UGX payment into your Personal Account. Then the bank automatically deducts the loan installment payment, account maintenance fee, and BWA service fee from your account.

If you open a Save-As-You-Earn Account with PBU and deposit money into this account, then you must use a separate deposit slip.

- Your Save-As-You-Earn Account will have a different account number from your Personal Account.

8

8 . W h a t i s 1 8 % d e c l i n i n g b a l a n c e i n t e r e s t ?

PBU calculates interest on a declining balance schedule. This means that you only pay interest on the amount of money that you still owe the bank. This amount is known as the outstanding balance. You only pay interest on the outstanding balance of the loan.

The interest rate is 18% per annum, which means 18% each year.

PostBank made a table that shows the equal loan payment installments paid each month. It shows how each installment is made up of interest and principal. The interest starts high and decreases as you pay back. This example shows the repayment of a 1,000,000 UGX loan at 18% declining balance. Your outstanding loan balance decreases as you pay back:

Payment Start of Period Balance Monthly Payment Interest Portion Principal Portion Outstanding 1 Feb-06 1,000,000 91,680 15,000 76,680 923,320 2 Mar-06 923,320 91,680 13,850 77,830 845,490 3 Apr-06 845,490 91,680 12,682 78,998 766,492 4 May-06 766,492 91,680 11,497 80,183 686,309 5 Jun-06 686,309 91,680 10,295 81,385 604,924 6 Jul-06 604,924 91,680 9,074 82,606 522,318 7 Aug-06 522,318 91,680 7,835 83,845 438,473 8 Sep-06 438,473 91,680 6,577 85,103 353,370 9 Oct-06 353,370 91,680 5,301 86,379 266,991 10 Nov-06 266,991 91,680 4,005 87,675 179,316 11 Dec-06 179,316 91,680 2,690 88,990 90,326 12 Jan-06 90,326 91,680 1,355 90,325 0 Yearly Total 1,100,160 100,160 1,000,000

(25)

WMI only makes 6-month loans at a 10% flat interest rate. You would pay 100,000 UGX in interest on a BWA loan for 1,000,000 UGX in just 6 months – with PBU you have a whole year to repay the same amount.

What kind of bank account do I need for my loan?

The account used to make loan payments is a Personal Account. This account is not good for long-term savings. The Save-as-you-Earn account from PBU earns a higher interest rate and charges fewer fees.

***SSEE APPENDIX IV FOR MORE INFORMATION ON TYPES OF

BANK ACCOUNTS***

9 . W h a t h a p p e n s i f I d o n o t p a y m y l o a n i n t i m e ?

You will pay a penalty fee if you do not make your loan payment on time. It is very, very expensive.

It will make it harder for you to get any more loans unless you have a very good reason why you did not make your payments on time.

If the bank seizes your property to repay the loan they will: 1. Sell it;

2. Deposit the income from the sale in your Personal Account;

3. Deduct the amount they are owed plus a reasonable processing fee; 4. Leave the rest on your account for you to keep.

Days Late Action Taken by PBU

1 day You will owe the amount of the missed payment

plus 10% of the outstanding loan amount.

7 days You will receive your first warning.

14 days You will receive your second warning.

30 days You will receive a 3rd warning and a notice that

the bank wants immediate repayment of the

entire outstanding balance on the loan plus the interest owed.

60 days If the loan is not paid in full with interest, the

bank will hire an auctioneer and your collateral will be seized.

Note: there is no fee for paying back the loan early if you are able to. You may apply for a new loan as soon as the old one is repaid.

(26)

1

1 0 . A T M s o r A u t o m a t e d T e l l e r M a c h i n e s

ATMs or “AutoBanks” allow you to access your bank account without going into the bank. You can use your ATM card to withdraw money from your account or to check the balance on your account. The ATM is quicker because the line is usually short.

Fee for withdrawing money from an ATM: 500 UGX per withdrawal no matter how much you withdraw.

Its costs 600 UGX or more if withdrawing from a teller in the bank, depending on which type of account you withdraw from.

PBU has a maximum amount you can withdraw from the ATM,which is generally 500,000 UGX in one day.

There is no fee for checking the balance on your account.

You cannot check a Save-As-You-Earn Account balance at an ATM.

Your ATM card only works at PBU.

*** SEE APPENDIX II FOR MORE INFORMATION ON USING ATMS*** ATM at PBU Mbale Branch

(27)

1

1 1 . C r e d i t R e f e r e n c e B u r e a u ( C R B ) C a r d s

Ugandan Law requires everyone who takes a loan from a commercial bank to register with the Credit Reference Bureau. You must get a CRB Card. Sometimes CRB cards are called Financial Cards.

What does the Credit Reference Bureau do?

The CRB collects information on your loan repayment history and creates a Credit Report.

The CRB gives these Credit Reports to banks like PBU. The banks can look up your loan history when you apply for a loan.

How does a Credit Report affect my ability to get a loan?

Every time you apply for a loan from a bank or a microfinance business like FINCA or PRIDE, you will have to present your CRB card. The bank will use your CRB card to look at your Credit Report.

- If you have a history of making late loan repayments or defaulting, the bank will find out and may decide NOT to give you a loan.

- The bank will know which banks you have taken loans from in the past. - The bank will also know if you have another loan at the same time and

where you got that loan. If you maintain a good credit record:

- You may get better loan terms like a lower interest rate or smaller collateral requirements.

- The application process may be faster with fewer documents or less time spent waiting.

CRB or Financial Cards

(28)

SECTION V: INDEPENDENT BANKING PROGRAM (STEPS 4&5)

After a one-year transition loan, you must move into the Independent Banking Program (IBP) if you want another loan. The IBP is split into two parts: Phase 1 and Phase 2. After one year in Phase 1, you must graduate to Phase 2. You can remain in Phase 2 for as long as you want loans of no more than 5 million shillings.

Both Phase 1 and Phase 2 of the Independent loan require the borrower to put down a 20% deposit of the loan amount. Start saving that deposit while you have a Guaranteed loan (which does not require you to make a deposit). You cannot borrow the deposit; you must save it. It is best to save a little each month. Banks prefer customers who have a good track record of savings.

STEP 4: PHASE 1

Loan Amount: Up to 2 Million UGX (no less than 500,000 UGX). Interest Rate: 18% declining balance.

Loan Term: 1 year.

Loan Payments: 12 equal monthly payments. Security:

- Cash Deposit: 20% of Loan Amount;

- Chattels Pledged: Equal in Value to at least 20% of Loan Amount; - BWA/WMI Guarantee: 11% of Loan Amount;

- Unsecured Portion: 49% of Loan Amount. Requirements:

- 250,000 UGX per month in Household Income. - Spouse or next of kin must sign as guarantor.

- Borrower agrees to pay 3,000 UGX monthly service fee to BWA. Restrictions:

- Borrowers should already have opened a Save-As-You-Earn account. o It has NO monthly maintenance fee.

o It pays up to 8% interest if you have a minimum balance of 100,000 UGX.

- The 20% Cash Deposit MUST stay on the Save-As-You-Earn account until the loan is repaid.

Advice: Start saving for the Phase 1 Deposit while you have a Transition Loan.

(29)

STEP 5: PHASE 2

Loan Amount: Up to 5 Million UGX (no less than 500,000 UGX). Interest Rate: 18% declining balance.

Loan Term: 1 year.

Loan Payments: 12 equal monthly payments. Security:

- Cash Deposit: 20% of Loan Amount;

- Chattels Pledged: Equal in Value to at least 80% of Loan Amount; - BWA/WMI Guarantee: NONE;

- Unsecured Portion: NONE. Requirements:

- 250,000 UGX per month in Household Income.

- Spouse must sign as guarantor. If not married or not living with spouse, next of kin must sign as guarantor.

- Borrower agrees to pay 3,000 UGX monthly service fee to BWA. Restrictions:

- The 20% Cash Deposit must stay on account until the loan is repaid. - Borrowers should already have opened a Save-As-You-Earn account.

o It has no monthly maintenance fee.

o It pays up to 8% interest on a balance of at least 100,000 UGX. - The cash deposit must be put in the Save-As-You-Earn account and

will get up to 8% interest.

Advice: Start saving for your Phase 2 Deposit while you have a Phase 1 loan – use your accumulated savings for a cash deposit for a larger loan in Phase 2.

1

1 . F e e s f o r P h a s e 1 a n d P h a s e 2 l o a n s

Minimum Balance on Save-As-You-Earn Account (this is a one-time payment when you open the account)

10,000 UGX Application Fee 15,000 UGX

Insurance Fee 1% of Loan Amount CRB Card Inquiry 10,000 UGX

ATM Card (only if you want one and do not have

one already) 10,000 UGX Loan Commitment Fee NONE

Deposit Slips Free of Charge

(30)

2

2 . P B U P a y m e n t s t o B W A

PBU will give BWA 100,000 UGX per month to use for ongoing trainings to help you understand how to make your business make more money. PBU is taking this program very seriously and wants all of you ladies to succeed, which is why they have agreed to contribute money to BWA for further training.

3 . L o a n a p p l i c a t i o n p r o c e s s f o r P h a s e 1 a n d P h a s e 2 l o a n s

You must obtain a written recommendation from BWA.

- BWA will present a list of Recommended Borrowers to PBU. You must fill the following forms at BWA:

1. Application to open a Save-As-You-Earn Account

o If you do not have a savings account, open one for your cash deposit. This account earns more interest than your Personal Account.

2. Signature Card (plus 4 small headshot photographs)

o This is part of the process for opening a bank account.

3. PBU Loan Application

o You must have your CRB card with you when you fill this out.

4. PBU Loan Application Fee Form

o This allows PBU to deduct 15,000 UGX as an application fee from your Personal Account.

5. Guarantee and Undertaking (Guarantor) Form

o Your husband, or if not married or not living with him, your next-of-kin, will have to sign this form in the presence of a PBU loan officer promising to guarantee your loan.

6. “Quick Cash ATM Card” Application Form

o Only fill this form if you want an ATM card for your PBU account. The fee for the ATM card is 10,000 UGX.

7. Two Internal Standing Orders

o The first one deducts the monthly loan payment from your account. o The second one transfers 3,000 UGX a month to BWA for the BWA

Service Fee.

PBU staff must visit you at your home and business to do an appraisal. - PBU interviews you about how your business works.

- PBU asks what types of things you can pledge as security. - PBU values the items that you pledge.

o The value of the items must be at least 20% of the loan amount for Phase 1 loans and 80% of the loan amount for Phase 2 loans.

- If the property you pledge as collateral is co-owned, like land or a home, your husband will also be required to sign a “spousal consent” form. - If you are pledging a land title as collateral, PBU will take the original

(31)

PBU approves loan and you must go to Mbale to complete the loan process. - You will sign the Letter of Loan Offer, or Loan Agreement.

- You will receive a loan repayment schedule. - You will pay the loan fees.

o PBU will deduct the fees for the loan from your Personal Account. You can either place the fees in the account beforehand, or they will deduct them from the total amount of your loan.

o PBU will make sure you have placed your deposit of 20% of the loan amount on your Save-As-You-Earn Account.

***Borrowers who have already opened Savings Accounts can place the cash for the 20% deposit on account at ANY time after the opening of the account.*** PBU transfers loan amount to borrower’s Personal Account and borrower can

then withdraw the loan amount.

BWA borrowers celebrate successful loan repayment with a graduation parade. C

C O N G R A T U L A T I O N S !

You know all about the WMI Transition to Independence Program. Use your loans wisely and manage your business carefully. You are taking big steps to make a better life for yourself and your family!

(32)

Section VI: Appendices

Appendix I: Explanation of Fees for Transition Loan

5,000 UGX: Minimum Balance on Personal Account

- To open a bank account you must put 5,000 UGX on the account. This amount has to remain on the account in order for it to remain open. - The 5,000 UGX is deducted from your loan amount unless you already

have a PBU account that has at least 5,000 UGX shillings in it. 10,000 UGX: Loan Application Fee

- PBU charges a 10,000 UGX fee to process your paperwork. 10,000 UGX: Insurance Fee

- PBU requires all borrowers to buy insurance on their loans. This money does not go to PBU but instead to an insurance company.

- The insurance is 1% of the total amount of the loan (for 1,000,000 UGX, the fee is 10,000 UGX).

- If you die or are seriously injured, the insurance will cover the repayment of the loan. Your family will not be stuck with the burden of loan repayment. Insurance protects your family!

- To prove serious disability, you must either demonstrate to a member of the bank staff that you are disabled, or have a medical report or police report stating that you are unable to do any work.

- To prove death, the bank requires a death report, which can come from either a Local Counselor or your neighbors.

7,500 UGX: Credit Reference Bureau Card Fee

- Everyone who receives a loan from a bank in Uganda is required by law to have a CRB card.

- The fee is for processing the documentation and for the card you get.

OPTIONAL 10,000 UGX ATM Card Fee

- The bank charges 10,000 UGX to process an ATM card. You do not have to apply for an ATM card if you do not want one.

(33)

Appendix II: Using an ATM

At the PostBank Branch in Mbale there is an ATM located outside the bank. At the ATM you can make withdrawals and check your account balance. If you need help using the ATM, you can ask anyone inside the Mbale Branch.

To use the ATM you need to have an ATM card, as well as a PIN number. You will receive your ATM card first. You must go inside the bank to get your PIN number. It will arrive about 2 weeks after your ATM card.

If you have the ATM card and pin number you can enter the ATM room outside the bank. Start by inserting your card into the slot at the bottom right of the machine. Push the card all the way into the slot and then remove it quickly.

The screen on the machine will ask you to pick a language. Your options are English, Luganda, or Kiswahili. Press the white button next to the language that you want on the screen.

The screen will tell you to type in your PIN number. Enter the number using the white number keys. Then press the ENTER key.

The screen will ask what type of transaction you would like to do: Check Balance or

Withdrawal. Again, press the white button next to your choice.

Once you choose a transaction, you will choose which account you would like:

Checking, Savings, or Credit. Press the white button next to the account you would like to withdraw from or check the balance of.

Checking the Balance

- The machine will show you the balance on the account. You can then choose to Print a Receipt or Continue.

- If you press Print a Receipt, it will then ask you if you want to complete another transaction. If you decide you want to withdraw, then you can choose

Yes. If you choose No the machine ends your transaction. If you choose Yes

you will have to retype your PIN number.

Withdrawing

- If you decide to Withdraw, then you will be presented with a list of amounts:

5,000 UGX; 10,000 UGX; 20,000 UGX; 50,000 UGX; 100,000 UGX; or, Other

Amount. You can select one of the given amounts or you can choose Other

Amount. Use the white number keys to type in the exact amount that you want to withdraw. The maximum amount allowed is shown on the screen (generally 500,000 UGX).

- The machine should then give you your money and print you a receipt.

(34)

Appendix III: CRB Card Information

The Card that you have been issued and/or will be issued by PBU will contain information about you, including:

- Your fingerprints; - A photo;

- Your name; - An ID number.

The card will allow banks like PBU to get information about your loan history, including:

- Loan amount; - Balance;

- Payments made; - Term of the loan;

- Date when you received the loan; - Collateral;

- Group members; - Employer information; - Addresses;

- Telephone numbers;

- Other info you provide when taking out a loan. You may get your Credit Report (for a fee).

- You must agree in writing before your loan history is sent to the CRB.

- If you think the CRB has wrong information, you can dispute that information and have them correct it.

If you are requesting a loan of 1 million UGX or less, the CRB inquiry fee is only 3,500 UGX. It is 10,000 UGX for a loan greater than 1 million UGX.

(35)

Appendix IV: Bank Account Information

(36)

(37)

Appendix V: PBU Documents

Financial Card Application Form (2 pages)

!!!!!!! !()*$ $'#&/( $'#&/+$( * ($ +'*!&% $'#&/$%*/' &($#$'#&/$%* %&($#$'#&/$%* #$'#&/ %$'#&/ +(%$ !"$ *&!(* $$//// !$$'#&/ %( # $# () &%* ) $'#&/& (!,()

(!)&%& (!,()($!*&

& (

& &+%*(/

))'&(*& &#!

&*(((& * (

&+%*(/&)!% #&&(&

!&% %!*$

!)*(!* '(*$%*&

&+%*/&-% &.&

++(+&+%*/ &)*#&-%

(!) _&-#&% _,_/&+

#!,** ())

*(*$ () &%* )

(38)

3-$%012!-$2(!2.,/31#!-2$)1+)#%-1%$"7!-*.&'!-$!)-2%0,1.&2!232.07-1203,%-21 .)-!-#)!+-12)232).-10%$)2 %&%0%-#%30%!3%'3+!2).-1 !-$)1%-2)2+%$2.)113%2()1&)-!-#)!+#!0$!'0%%2(!2"71)'-)-'2()1!//+)#!2).-')4%,7#.-1%-22(!22()1

)-&.0,!2).-!-$!-7").,%20)#)-&.0,!2).-&)-'%0/0)-2),!'%1!-$/(.2.'0!/(12(!2(!4%$)43+'%$2.."2!)-2()1#!0$,!7"%31%$2./.1)2)4%+7)$%-2)&7

,%-.5.0)-2(%&3230%&302(%0#.-1%-22(!2)-&.0,!2).-,!7"%31%$"72(%.,,%0#)!+!-*10%$)2-12)232).-1!-$)#0.&)-!-#%%/.1)22!*)-'

-12)232).-1&.0)$%-2)&)#!2).-/30/.1%1!15%++!1.4%0!++8#0%$)290)1*/0%4%-2).-,!-!'%,%-2!-$13#(1),)+!0/30/.1%1 0),!07%+%/(.-% 3,"%0 $)!+)-'-2%0-!2#.$%).-!+ %').-)!+)-'.$% 3,"%0 .")+%%+-3,"%0 $)!+)-'-2%0-!2#.$%).-!+ %').-)!+)-'.$% 3,"%0 !63,"%0 $)!+)-'-2%0-!2#.$%).-!+ %').-)!+)-'.$% 3,"%0 2(%02%+%/(.-%-3,"%0 $)!+)-'-2%0-!2#.$%).-!+ %').-)!+)-'.$% 3,"%0 ,!)+!$$0%11 .3-207.$% +.220%%2. %').- +..0. )120)#2 -)2!,% .3-27.5- /!02,%-2. 3"30".3-27 .6. !0)1( .12!+2.5- 20%%2!,% ),%_{#300%-2!$$0%11},/+.7%0(!1"%%-!2 _%!₀₁ _.-₂₍₁ %+%/(.-%3,"%0 -$)!+)-'2%0-!2#.$%).-!+ %').-)!+)-'.$% 3,"%0 2(%02%+%/(.-%-3,"%0 -$)!+)-'2%0-!2#.$%).-!+ %').-)!+)-'.$% _3,"%0 !63,"%0 -$)!+)-'2%0-!2#.$%).-!+ %').-)!+)-'.$% 3,"%0 ,!)+!$$0%11 .00.5%0 .-.00.5%0 6)12)-'.!-!##.3-2. //+)#!-2:1-2%0-!+0%&.

(39)

(40)

Standing Order Form

STANDING ORDER

From account number ………..

Name: ………...

Address: ………

Date: ………

To:

POSTBANK UGANDA LIMITED

………BRANCH

On ………. and on the …….………day of each month/quarter / year, please

pay to ………

For account of ………

the sum of ………(Words)……….………

………

Debiting my / our account with the equivalent. (Plus all charges to be deducted from the payment)

This order is to remain in force until ……….. , or when the loan plus interest thereof is fully repaid.

SIGNATURE ………

(41)

Loan Application (8 pages)

Page 1 of 8

PBU Serial No……….

SMALL BUSINESS LOAN APPLICATION FORM (PBU SBL Sept 2010)

SECTION 1.0 PERSONAL DETAILS Date_______/_____/___________

Sur Name First name

Other Names Operational a/c no:

PBU number Loan a/c No:

Branch Name Branch code: Nationality:

Sex Male Female Marital Status single married divorced widowed Separated

Date of birth Application No Application Date:

SECTION 1.1 Identification SECTION 1.2 Employment

Identity card No Employer name

Issue Date ( ID) Employee’s No. i.e. UPDF, Police etc:

Issued by Employment type Formal/informal/self employed

TIN No Primary occupation

FCS no Monthly Income

Voters card No Salary frequency

NSSF No. SECTION 1.3 Spouses:

Driving permit no Spouse(s) Names:

Driver’s ID no. Spouse work place

Issue date ( driver’s license): Spouse Tel. fixed line

Passport No Spouse Tel. mobile

SECTION 1.4 Home Address: Business address Employer address

Premises ownership Owner Tenant

L.C. 1 Zone Town or City Plot No Street Name Parish & Sub county Region

Postal address and town: Tel: Primary line Tel: Mobile E-mail address Years at the address:

Bank a/c(s): ACCOUNT 1 ACCOUNT 2 ACCOUNT 3

Bank Name Account /Type Account No

(42)

Page 2 of 8

SECTION 2 – INFORMATION ABOUT THE CO-SIGNERS / GUARANTORS

Details Guarantor/cosigner1 Guarantor/cosigner2 Guarantor 3

Sur Names First Name Other names Date of birth Sex: Marital Status PBU No,

Operational; a/c( PBU) FCS No

Identity card No Issued by Date issued

Employee’s No. i.e. UPDF, Police etc: NSSF no. Employer Name Passport No Voters card No Tax Identification No Driving permit no Drivers ID no.

Issue date( Drivers License) Tel. Primary

Tel. mobile

Home addresses

Home ownership: Owner Tenant Owner Tenant Owner Tenant Plot No( home)

If renting; owner’s name L.C. 1 Zone Town or City Street name Region Parish Sub county

No. of years at address

Primary occupation work place/business address:

Location L.C. 1 Zone

(43)

Page 3 of 8

Plot No Town or City

Region Postal address & town

Parish Sub county

No. of years at address Salary frequency Email address Monthly Income

Guarantor/consigner Signature

SECTION 3 – SOCIO-ECONOMIC INFORMATION OF LOAN APPLICANT(S):

3.1 Monthly Income( please exclude spouses income if this is not a joint loan)

Description UShs. per month

1. 2. 3. 4.

Total Monthly family income UShs. 3.2 Monthly Family Expenses

Description: UShs. per month

Nourishment/Food

Rent Water Electricity Transport Personal up-keep (Saloon, barber e.t.c)

Education Entertainment

Others (Insurance, Loan payments e.t.c.)

Total monthly family expenses UShs

Number of children: ___________________________

Number of school going children: ___________________________ Total number of dependants: ___________________________

(44)

Page 4 of 8 SECTION 4 – CREDIT HISTORY :

SECTION 5 – INFORMATION ON FACILITY APPLIED FOR:

5.1 Loan Amount requested: UShs _______________________________ ____ ________ 5.2 Loan Term requested: ___________________________ Purpose of the loan ____________ _________________________________________________________________________ 5.3 How much can you easily pay (UShs): per week? ___________ And per month? _________ 5.4 Activity description ______________________________________________________________ 5.5 Industry sector code (Tick the appropriate) Trade and commerce Agriculture Building and construction Education Government Manufacturing Mining and Querying transport and communication Business Services Non residents Solar energy Personal and House hold Electricity and water

5.6 Sub sector Code: ___________________________________________________________ 5.7 TIN number ___________________________VAT Number _________________________

5.8 Repayment Mode (Tick the appropriate) Monthly Weekly Annual Quarterly Bimonthly

Monthly Bi-Annual One lump sum Revolving Irregular

5.9 Credit / loan type:mortgage property Leasing Loan Overdraft Performance bond Line

of credit Letter of credit Hire purchase Financial Guarantee

SECTION 6 BUSINESS INFORMATION:

6.1 Name of Business: _ _______________________________ Years in operation _______________ 6.2 Location of Business: (see page one)

6.3 Business Type code: sole proprietor Partnership Leasing co. cooperative

Limited liability co Public Institution NGO Limited by Guarantee Trust ______________________________________________________________________________

6.10 INCOME AND EXPENSES

6.10.1 Income on Sales/Receipts of business Volume of Sales, Daily Sales/Receipts:

Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday Sales

Weekly total sales Shs. Monthly total sales ( i.e. weekly sales * 4)

Shs.

6.10.2 Receivables (if they are regular) Shs. _________________ 6.10.3 TOTAL MONTHLY INCOME ( Sales plus receivable) Shs. _______________________

Date Bank Name Amount granted Period Repayment form Performance

1

2

3

4

(45)

Page 5 of 8 6.10.4 Expenses

How often do you buy materials/merchandise? ____________ per week/months

Amount you buy per month? Minimum UShs. ____________ Maximum UShs. _________________ 6.10.5 Average purchases (cost of sales)……… Shs. ______________ 6.10.6 Operational /General costs per month:

Total Salaries Shs. ____________ No. of employees____ Total Wages Shs. ____________ No. of employees____ Water Shs. ____________ Electricity Shs. ____________ Transport Shs. ____________ Rent Shs. ____________ Fuel Shs. ____________ Loan Payments Shs. ____________ Telephone Shs. ____________ Medical Shs. ____________ Others 1________________ Shs. ____________ Others 2 ________________ Shs. ____________

Total general costs………... Shs. ____________

Total Expenses Shs. ___________________

6.11 BALANCE SHEET

01 ASSETS

Current Assets Amount

a) Cash at hand Shs. _______________

b)Cash at PBU accounts Shs. _______________

c) Cash at other banks and MFI’s Shs. _______________

d)Accounts Receivables (attach list) Shs. _______________ c) Inventory of the business (attach list) Shs. _______________

Total Current Assets ……….Shs. __________________ 02 Fixed Assets

Description of Asset(s) Estimated value ( UShs)

1. 2. 3.

Total Fixed assets

TOTAL ASSETS Shs __________________

(46)

Page 6 of 8 6.12 LIABILITIES AND EQUITY

01 Current Liabilities a) Supplier Credit (attach list)

Name of Supplier Frequency of supply Date of repayment Amount in UShs. 1 2

Total Supply Credit UShs. __________________ b) Loans

Institution Amount granted

Loan period

Installment Amount Outstanding in UShs.

Total Bank loans UShs. __________________

Total Liabilities UShs. __________________

Equity UShs. __________________

SECTION 7 – SECURITY:

01 Collateral type identification: No collateral Surety(guarantee) Supportive Letters

Mortgage(properties) Motor vehicles Plant and machinery Other assets Quoted shares

Un Quoted Shares Financial guarantee

Collateral reference number ___________________________ Collateral reference Number___________

Collateral Holders name ___________________________ Collateral description_____________

Open market value of collateral ________________________ collateral FSV __________________ Guarantor 1 Guarantor 2 Guarantor 3 Guarantor Names _____________ ________________ ____________ Guarantee type identification _____________ ________________ ____________ Guarantor identification type _____________ ________________ ____________ Bank accounts _____________ ________________ ____________

SECTION 8 – ATTESTATION:

I attest that the information requested in this form has been explained to my satisfaction and comprehension.

I warrant that the information contained herein is true and correct in every respect. I undertake to notify PostBank Uganda in writing immediately of any change in this information.

Authorized Signatory/signatories (Client) --- --- --- Client’s stamp/seal (if applicable) Name Signature Date Witnessed by:

(47)

Page 7 of 8

SECTION 9 – BALANCE SHEET AND CASH FLOW SUMMARY 9.1 Balance Sheet

Particulars UShs. Particulars UShs.

Assets Liabilities and Net Worth

Current Assets: Current Liabilities:

Cash at Hand _______________ PostBank Uganda Loans ____________ Cash at PostBank _______________ other loans ____________ Cash at Other Banks _______________ Supplier Credit ____________ Inventory _______________ Other Current Liabilities ____________ Accounts Receivable _______________

Other Current Assets _______________

Total Current Assets _______________ Total Current Liabilities ____________

Fixed Assets: Long term liabilities:

Furniture and Fittings _______________ Long-term debts ____________ Equipment/Machines _______________

Motor Vehicles _______________ Land and Buildings _______________ Other Fixed Assets _______________

Total Fixed Assets _______________ Total Liabilities ____________ Total Net worth ____________

Total Assets _______________ Total liabilities ____________

And Net Worth 9.2 Cash Flow of Business and Family (Per Month)

Particulars UShs.

Inflows of Business:

Sales/Receipts _____________

Receivable Account - Regular _____________

Total Receipts of Business _____________

Outflow of Business:

Raw Material/Merchandise Purchases _____________ Salaries _____________

Other Expenses _____________

Total Business Expenses _____________

Net Business Income _____________

Add: Monthly Family Income _____________

Less: Monthly Family Expenses _____________

Net Monthly disposable Income _____________

Est. loan installment at the adjusted repayment rate of 45% _____________ Maximum loan entitlement for __________ months _____________

10. - _{COMMENTS AND RECOMMENDATION OF CREDIT OFFICER}

10.1 Comments_____________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________

Credit Officer’s name____________________ Signature ______________Date:…………

Loan Amount in UShs. Loan Period Repayment Mode Installment (Shs)

Applied Recommended

(48)

Page 8 of 8 SECTION 11

Credit Reference Bureau consent

WHEREAS the Central Bank of Uganda hereinafter referred to as BOU appointed, The Credit Reference Bureau hereinafter referred to as the Bureau to collect and maintain data regarding borrower from all Financial Institutions regulated by BOU;

AND

WHEREAS PostBank Uganda Limited hereinafter referred to as PostBank is a Financial Institution regulated under the Financial Institutions Act and has entered into an agreement for data collection and maintenance with the Bureau;

IT IS HEREBY AGREED AS FOLLOWS;

For purposes of PostBank performing its statutory assessment of its customer’s credit worthiness by crosschecking my/our credit status with the Credit Reference Bureau, established under the Financial Institutions Act No.2 of 2004, I hereby consent that;

(a) PostBank may receive, share or exchange with the Bureau any relevant financial information/data about me/us supplied to it by any financial institution,

(b) PostBank may issue any reports whether positive or negative regarding my/our economic, financial and commercial obligations and confidential information contained therein to the Bureau,

(c) PostBank may collect my/our personal information including finger prints, photographs, name and contact details and any other identifying information, which I/we undertake to avail whenever required, and thereafter forward the same to the Bureau, and

(d) PostBank’s may issue a card with all or any of the information in (c) above to be used to link the credit profiles and financial information kept by the Bureau to me/us for PostBank, the Bureau or any other financial or authorized institution with a compatible card reading device to verify my/our identity and credit record. I/we have been duly advised and I am/we are fully aware of my/our right to lodge a complaint regarding, or challenge any information disclosed to or by the Bureau.

Authorized Signatory/signatories (Client) --- --- ---

Client’s stamp/seal (if applicable) Name Signature

Date

In the presence of:

Bank officer’s Signature--- Date: ---

Please attach: 1. Map to the residence 2. Map to work place

(49)

Letter of Loan Offer (2 pages)

POST BANK UGANDA LIMTED

Loan Application No:……… Date ………

Mr/Ms/Dr/Mrs/Haji/Sr ………. ………..

Subject: LOAN APPLICATION OF USHS.……….

Referring to your application for a loan facility dated ………, PostBank Uganda is pleased to inform you that, we have preliminarily approved a loan facility of UShs……….subject to the following terms and conditions:

1. Interest of ...% per month.

2. Repayment of loan will beon MONTHLY basis.

3. Loan Application Fee of Ushs.10, 000/=payable before loan disbursement. 4. Acceptance Commission of ...% (Ushs...) of the loan

principal amount charged upfont on loan disbursement.

5. Insurance Fee of ...% (Ushs...) of the loan principal amount charged upfont on loan disbursement.

6. The loan will exclusively be used for the purpose stated in your Application 7. The following Security will be pledged to PostBank Uganda:

... ... ... ...and Mr/Ms/Dr/Mrs/Haji/Sr... as Guarantor (s).

8. All costs for processing the loan documentation including security as well as the costs of the valuation of the immovable assets will be borne by you, inclusive the legal fees as would be charged thereon.

Should feel satisfied with the above terms and conditions, sign the acceptance section of the copy of Terms and conditions to signify your acceptance and report to our offices together with the documents as soon as you receive this offer.

(50)

ACCEPTANCE OF THE LOAN OFFER dated this ...date of ..., 20...

I..., the undersigned hereby acknowledge to have received the loan letter of offer and my signature hereunder signify my acceptance of all the above stated loan terms and conditions.

Name ...Signature...

This offer will be valid until ...date of ..., 20... If you wish to avail yourself of our offer, please return the copy of this letter, duly signed by you as evidence of your acceptance.

We shall be pleased to answer any questions or give any additional information concerning our financial services.

Yours faithfully,

POST BANK UGANDA LIMITED

... ...

(51)

(52)

(53)

(54)

(55)

(56)

(57)