Jeff, I am wondering if you could explain what the problem is with banks or others lending to savings groups? I can see where it could be an issue if the banks are lending to the individual members of the group. However, it seems to me that if the group itself takes the loan, the group almost always is making money by lending that money to its members at a higher rate. Additionally, the group gets the immediate benefit of increased liquidity which it can use to lend to members (especially if the loan comes to the group at the beginning of the loan cycle), and the benefit of fully closing out the books and fully distributing all of the savings and interest from the previous cycle. The final benefit of an external loan would appear to be that it is actually cheaper for the group than taking a quasi-equity instrument. What seems to be a real need is a way to get savings groups access to loans in a way that works well for the group (i.e. at the beginning of the cycle, at a rate lower than the internal rate charged to members.) So, wondering if you could expand on what the problem is with loans to savings groups. THANKS!
Jeff, I am wondering if you could explain what the problem is with banks or others lending to savings groups? I can see where it could be an issue if the banks are lending to the individual members of the group. However, it seems to me that if the group itself takes the loan, the group almost always is making money by lending that money to its members at a higher rate. Additionally, the group gets the immediate benefit of increased liquidity which it can use to lend to members (especially if the loan comes to the group at the beginning of the loan cycle), and the benefit of fully closing out the books and fully distributing all of the savings and interest from the previous cycle. The final benefit of an external loan would appear to be that it is actually cheaper for the group than taking a quasi-equity instrument. What seems to be a real need is a way to get savings groups access to loans in a way that works well for the group (i.e. at the beginning of the cycle, at a rate lower than the internal rate charged to members.) So, wondering if you could expand on what the problem is with loans to savings groups. THANKS!