Loan modalities
Purpose: The loan is to be given to members of the Association who need financial assistance to start a business, or to support existing businesses and/or services.
Amount: The maximum amount shall be two hundred thousand naira only (₦ 200 000) and shall be subject to review as funds increase.
Conditions:
• A concise business plan indicating what the loan will be used for.
• A guarantor who is a committed financial member of the Association. “The liability of the guarantor shall be co-extensive with that of the principal beneficiary unless otherwise stipulated in the loan contract”.
• A beneficiary shall be obliged to pay the Association’s dues with effect from the month the loan is disbursed. Any default in dues payment shall result in non-qualification for further loan applications.
• If there are more loan applications than the Association can currently afford, consideration shall be given to the most updated financial member.
Disbursement: The approved loan shall be a one-time disbursement but can be subjected to tranche disbursement based on the number of applications.
Repayment: The repayment period shall not exceed twelve (12) months from the date of disbursement. Following a three (3) months moratorium period (that is an agreed period of no repayment), the repayment shall be completed within nine (9) months. Repayment can be made once, twice or in installments withinthe repayment period to the Association’s bank account. The due date shall be on or before the last day of any given month(s).
Defaults: Default on repayment shall not be tolerated and strict measures shall be enforced. The Association shall primarily contact the beneficiary for repayment. If the beneficiary defaults, then the guarantor is liable for the outstanding obligation, which they must meet, otherwise, legal actions shall be taken against them.
Chronologically, the steps to be taken at default on repayment are:
• A first reminder ten (10) days after the due date.
• A second reminder fifteen (15) days after the due date, with a notice to the guarantor.
• Thirty (30) days after the due date, the guarantor’s liability clause shall be activated.
• Six (6) months after the due date, legal action shall be initiated, the cost of which shall be borne by the debtor (beneficiary).
These steps also apply in the case of inconsistent payments within the repayment period.