Social Enterprise Development Partnerships, Inc.

Most commercial financing institutions use asset-based or project-based lending since their target clients are those that have collateral and are able to craft business plans. However, microfinance clients neither have the assets nor the skills to qualify loans from traditional commercial funding sources. Thus, microfinance uses character and cash flow as the basis for extending loans to them. The course enables participants to assess current client selection processes; articulate the principles of microfinance as guide for client selection; practice the use of cash flow and credit and background investigation; modify loan application forms to capture essential information that could be used to evaluate a client’s character; and identify policy gaps to improve client selection and retention. The course hopes to improve the portfolio quality of microfinance institutions and at the same time provide better and more efficient financial services to their clients.

Outreach is important in achieving the dual mission of a microfinance institution, social mission and financial sustainability. Forming centers are crucial for microfinance institutions (MFIs) practicing group methodology. In addition, loan application form is crucial to assess the character of a potential microfinance client. The training on center formation and loan application form teaches microfinance managers and staff on the importance of proper client selection in the provision of microfinance products and services. The course aims to show how proper administration of client selection procedures affects different aspects of an organization’s performance. In this course, a brief introduction on the fundamentals and methodologies of microfinance will be presented to provide the participants with a background on microfinance clients and the impact of microfinance in their lives. The different lending approaches will also be discussed, with emphasis on character and capacity-based lending. Participants will be given tips on area selection, center formation and client selection, particularly through analysis of the loan application form. The training also provides a venue for microfinance practitioners to share their experiences on opening new areas and selecting new clients.

An important means to address delinquency is through proper client selection. Cash flow and credit and background investigation are techniques use to select clients properly. This course provides an in-depth discussion of two aspects of character and capacity-based lending: cash flow analysis and credit and background investigation (CI/BI). The provision of microloans relies on these in approving loan applications because microentrepreneurs have little or no collateral, and the cost of collateral registration usually exceeds the amount of the loan. The course emphasizes the importance of client selection procedures in sustaining MFI operations. Many microfinance institutions face delinquency problems when inadequate attention is given to client selection. The training is participatory, with exercises on cash flow analysis and simulations of CI/BI interviews. Participants will also be given tips for collection, client monitoring and follow-up.

The business planning for microenterprises course is designed to improve the management skills of microentrepreneurs. The course enables microenterprises to craft their own vision and mission; assess the external environment where they work; identify and evaluate opportunities; improve delivery of products and services; craft a personal financial plan; and learn techniques in marketing their products and services. The training approach employed is attuned to the capacity of most microentrepreneurs to absorb new learnings. The business planning process also render microenterprises ways and means to access cheaper suppliers; access funds; link with other markets; and negotiation. At the end of the course, participants will have their own business plans that they could readily implement.

With the success of the provision of credit among the poor, the utilization of credit for adequate income and employment generation is a cause of concern for most of microfinance stakeholders. It has been observed that microenterprises need an enormous range of services, not just financial. This course is designed for microfinance institutions who are exploring the possibility of providing business development services (BDS) to their clients. BDS is for MFIs who wish to assist their clients in improving the performance of their enterprises, their access to markets, and their ability to compete. The course discusses the situation of microenterprises in the Philippines and the core principles of microenterprise development. Existing business development services in the market will be presented, along with current market needs based on research results. The training also assesses the institutional readiness of MFIs for business development services. Participants are expected to learn the different types of business services they can provide, and the different ways of identifying commercially viable solutions and designing appropriate BDS interventions.

Branch viability is the capacity of a branch to sustain its operations and continuously create value for the organization and its clients. The branch viability course discusses the standards for assessing branch viability, including indicators for measuring the performance of staff members and of the organization as a whole. The course includes sessions on basic financial analysis and financial management that are necessary both for assessing the feasibility of opening new branches and improving the performance of current branches. The training approach is largely participative, allowing knowledge-sharing between participants on the challenges they are facing in their organizations. Towards the end of the course, the necessary steps toward sustainability will be discussed, with recommendations and specific action points for the participating organizations.

Middle managers play a crucial role in microfinance since they could be considered as the backbone of the microfinance institutions (MFIs). The middle management is the point where microfinance’s lofty mission must be translated into a sustainable and scalable operation. The middle managers are often poorly equipped to deal with this challenge. The branch operations course is designed to provide microfinance managers with a holistic understanding of the various areas involved in managing microfinance operations. Participants are expected to gain practical knowledge and skills for effective delivery of microfinance products and services. The course covers topics such as management and leadership roles, the role and dynamics of teams, conflict resolution, delinquency management, financial management, risk management and customer service. The training approach includes workshops especially designed to assist microfinance managers in handling the various operational issues that they face such as delinquency, financial performance monitoring, human resource issues, and operational risks.

Microfinance institutions face a variety of risks in delivering its products and services. Written policies and procedures are put in place in order to manage these risks. Branch and area managers perform audit functions to ensure that policies are followed, financial and operating information are accurate and reliable, and risks are identified and minimized. Training on Branch Audit will outline step-by-step process, including specific activities, of Branch and Area Managers’ audit role. Participants will also be trained on how to communicate results to internal audit unit and what action points must be done post audit. Branch and Area Managers will be equipped in evaluating performance of their subordinates. Finally, performance evaluation tools for middle management will also be discussed.

Training on Accounting for Non-Accountants ultimately aims to assist managers in identifying and analyzing problems through information generated from financial reports and eventually making management decisions based on these. The training course will include process on how financial statements are created, basic accounting principles, and financial ratios.

The financial analysis course starts with a presentation of basic financial statements and prescribed chart of accounts for microfinance institutions and the government. The heart of the course is the method for adjusting financial statements to account for subsidies, donations, inflation and adequate loan loss provisioning. Recognizing these adjustments to the financial statement reveals the true financial performance of an MFI. International, local and best practice financial standards are used to determine the quality of the financial performance. These include the PEARLS Monitoring System, COOP-PESOS, EAGLE, Microfinance Standards to all Types of Philippine MFIs, and CAMELS Rating System. Different areas for financial analysis will also be tackled, including efficiency, portfolio quality, profitability and financial structure. Finally, the course also discusses measures of effectiveness that determine an MFI’s success in achieving its social mission.