Business Savings Groups
What is a Business Savings Group?
A Business Savings Group (BSG )is a group of micro-entrepreneurs that are passionate about building profitable and sustainable through business training, mentoring, coaching, networking, appropriate technology and financial inclusion. A BSG is made up of 4-5 micro-entrepreneurs who save together to build a savings fund that is used for emergencies and support to loan repayments.
What is a Business Revolving Fund?
A Business Revolving Fund (BRF) is a financial capital pool targeted at providing the BSGs with funding for working capital. Each BSG member is given an opportunity to apply for a loan. The loan approval process consists of 2 major stages.
1. Group Self-Assessment
Ownership of the activities of the BGS by the members is a foundational principle. The group members work together to assess the businesses of the BSG members. They make loan recommendations to Gilead based on their assessment.
2. Gilead Business Assessment
Gilead offer a group loan to BSGs based on the following selection criteria.
The micro-entrepreneurs have gone through the Hope Ventures business training (Business Essentials for Micro-entrepreneurs).
The BSG members have attended the training in Savings and Credit Management (SCM).
The BSG members have been saving for 3 months after the SCM training.
The micro-entrepreneurs are active members of the Gilead Business Association
(GBA). GBA is a community of entrepreneurs that goes beyond the BSG members to include other entrepreneurs in the community.
How does the group manage their collective savings?
The group has autonomy over the management of their collective savings. If a member has an urgent need, the group can decide whether to grant them a small loan from the savings. These savings are primarily utilized for emergencies such as health issues or funerals. Furthermore, they serve as collateral for the Gilead loan.
How is the contribution amount to the savings determined, and are members obligated to save while in the group?
The savings group constitution dictates both the amount to be saved and the frequency of these savings. As members of the group, individuals are mandated to make regular savings contributions.
What is the typical duration for which entrepreneurs keep their savings pooled together?
Entrepreneurs usually maintain their collective savings for a period ranging between 6 to 12 months. This period is termed a 'savings cycle.' At its conclusion, the accumulated funds are equitably distributed among all members. Such distribution facilitates entrepreneurs in managing sizeable, anticipated expenses, including school fees, Christmas provisions, travel, or inputs for crop cultivation, especially maize/corn. This strategy ensures the safeguarding of business capital.
Following successful repayment of the $1200 loan, how soon can a BSG reapply for another loan of the same amount? Also, can they apply for larger loan amounts in the future?
Post repayment, a BSG can apply for another $1200 loan after a minimum of 7 days, contingent on their preparedness for the loan application. In the future, while there's the possibility to request larger loan sums, this is limited by the overall size of the loan fund.
Is the $1200 loan typically allocated to a single entrepreneur or distributed among several?
The $1200 loan amount is generally divided among multiple members of the group.
What is the expected repayment rate for loans in this initiative?
The projected loan repayment rate within this program stands at 80%.