Loans

The Initiative provides direct loans to partner institutions. These loans are small and are intended to help meet the financing needs of partner MFIs who cannot yet access commercial funding. The loan conditions vary but all loans are interest-bearing and must be repaid in full on a quarterly or annual basis.

 

Guarantees

The Initiative’s mulit-million dollar program for MFIs will serve as an important source of financing for mircofinance providers in the MENA region. Guarantees will take the form of an irrevocable Standby Letter of Credit (SBLC) or Letter of Guarantee (LG) in order to leverage local funds. The Initiative plans on deploying $20 million during the first phase of investment, with up to $50 million available for the MENA region.

 

Key Features of the Grameen – Jameel Initiative Include:

1. 1)The minimum guarantee amount is $100,000 and the maximum is $5 million and can extend up to 5 years.
2. The guarantee is used to leverage local currency financing for loan portfolio expansion (not working capital or capital expenditures) by a local commercial bank(s).
3. As the purpose of the guarantees is to foster long-term relationships between MFIs and local commercial banks, guarantees cannot be used to support financing from apex institutions, microfinance funds, or donor-backed funding.
4. The Initiative will charge an annual fee of 1.5 – 2.5% of the SBLC or LG for providing the guarantee and its value-added services.

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Criteria for Guarantees:
Both Initiative partners and non-partners are eligible for guarantees. The MFI must have a poverty focus, seek high growth, and be professionally managed. Other criteria are as follows:

1. 1)In operation for at least 3 years with full financial statements, of which the last two are professionally audited.
2. The MFI must have at least 10,000 active clients or a loan portfolio greater than $2.5 million USD.
3. Portfolio-at-risk greater than 30 days is less than 5%.
4. Near or above full Operational Self-Sufficiency.

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