Our project is designed using an Invest, Recycle and Snowball (IRS) model as established by the author. The Invest principle is focused on offering loans to the group or groups of people for the first time. This is followed by Recycling the money which comes from collecting payments from previous loans. As soon as there is enough money in the account, then it is offered to a new group. Lastly, the Snowball model is based on expanding the clientele by maintaining the existing clients and recruiting new ones. The Snowball principle expands the loan amounts by 25% every time the client renews their initial successful loan service. These principles were established to determine a long-term history of credit loans among micro-entrepreneurs.
Our program is designed to challenge discrimination that most of the micro-entrepreneurs have experienced while running their businesses. This is based on being denied loans to increase their operating capital simply because they do not have collateral. To challenge this, we had to come up with alternative ways of replacing collateral. These include forming a group whereby group members work as a collective form of loan security through their mutual support of one another. This initial group formation is followed by requiring a photocopy of a client’s national ID, they are getting a recommendation letter from the Local Council Leader, bringing a guarantor and finally having the team complete a group loan application form.
Trust. We also allow our clients to form their own groups so as they can associate with the people they know. The author of the project noticed that once people who understand each other form a group, they can get on well with the people they trust.