JWOC Microfinance Programme Frequently Asked Questions
Please click on the questions below to find out the answer or scroll down to read all the questions and answers from the beginning.
Q: Who does JWOC lend to?
Q: Where does JWOC find its borrowers?
Q: Why can’t JWOC’s borrowers go to an accredited bank for a loan?
Q: To which types of businesses does JWOC normally lend?
Q: What is JWOC's process for determining borrower eligibility and distributing loans?
Q: How much money does JWOC lend to borrowers?
Q: What is JWOC’s current interest rate? Does the project make a profit?
Q: What is the repayment rate of JWOC’s Microfinance programme?
Q: Does JWOC have a late penalty for borrowers who do not pay on time?
Q: Are JWOC’s loans made to Groups or Individuals?
Q: Does gender play a role in JWOC’s loan decisions?
Q: What is the average age of a JWOC borrower?
Q: Who is responsible for collecting loan repayments?
Q: How often does JWOC collect repayments from its borrowers?
Q: Does JWOC require a minimum/maximum number of people per group loan?
Q: Do many JWOC borrowers who have repaid their first loan apply for a second or more?
Q: Why donate to JWOC’s Microfinance programme?
Q: Who does JWOC lend to?
A: JWOC aims to lend to the most vulnerable groups in society - those living at or just below the poverty line – who wish to expand their business.
Q: Where does JWOC find its borrowers?
A: Our potential borrowers are from the local villages in Siem Reap, close to our office. This allows us to continually and adequately monitor the businesses, and to ensure that a borrower can easily get to JWOC to repay if they are unable to make a payment on the normal date.
Q: Why can’t JWOC’s borrowers go to an accredited bank for a loan?
A: For most formal banks the individual needs several things, including: minimum amount of money to open a savings account with; a form of collateral; some form of recorded and tracked credit history to attest to financial character; to be literate to fill out bank paperwork; to have some sort of formal employment. Those that JWOC seeks to support commonly have none of the above and are thus not eligible for a bank loan.
Q: To which types of businesses does JWOC normally lend?
A: JWOC most commonly lends to small, roadside food vendors (noodles, rice soup, etc.), moto repair shops, grocery stands, and recycling collectors. Other less common businesses we have lent to include clothing sellers, environmentally-friendly handbag makers, and bamboo jewelry artisans.
Q: What is JWOC's process for determining borrower eligibility and distributing loans?
A: We have initiated a thorough application process, beginning with advertizing an Information Night in local villages and to successful past borrowers. At the Information Night, we give the Borrowers a presentation about the difference between being a SAVER and being a BORROWER, in turn showing them what it actually means to have debt. Potential borrowers then complete an application form the following week. We then conduct business visits, to check that the details given on their application are accurate. Finally, we select our successful borrowers and inform them that they are to receive a loan. We also conduct a survey to assess their life and family situation prior to receiving the money. The process concludes with the Borrowers returning to JWOC, where they are given another presentation about JWOC’s loan terms and how to use their loan effectively to help grow their business. Following the educational presentation, the loans are disbursed.
Q: How much money does JWOC lend to borrowers?
A: For a first-time JWOC borrower, our loans range from $50-150. The amount is determined by a combination of factors including: the nature of the business; the purpose of the loan; the family situation; current income levels; and the amount of money requested.
Q: What is JWOC’s current interest rate? Does the project make a profit?
A: JWOC currently charges a total interest rate of 12% per 6 month loan, or 2% every month. This is lower than most other microfinance organizations in Cambodia, which are currently charging between 2.5 – 3% per month. We do not make a profit from the interest gained – money repaid is returned to the program’s portfolio for future loans.
Q: What is the repayment rate of JWOC’s Microfinance programme?
A: Our repayment rate was 86% for 2008. We are hoping to increase this through the implementation of more vigorous training, systems and procedures.
Q: Does JWOC have a late penalty for borrowers who do not pay on time?
A: Yes. A late penalty is important, not for the money it generates for the program, but to ensure loans are taken seriously and paid on time for the benefit of the whole community. Our late penalty is 25% of the principal amount of the loan due each week.
Q: Are JWOC’s loans made to Groups or Individuals?
A: JWOC does not make individual loans unless to a good previous JWOC borrower who has a legitimate reason for not being in a group. All of our loans to first-time borrowers are group loans. This mitigates repayment risk and allows group members to help one another in emergency situations.
Q: Does gender play a role in JWOC’s loan decisions?
A: Studies conducted by pioneer microfinance organizations such as Grameen have shown that microfinance loans are normally most beneficial to a family when the loan is made to a female within the household. Such reports particularly suggest that lending to females creates higher levels of monetary savings, has more children enrolled in primary education, less issues with domestic violence, and higher repayment levels. JWOC’s previous loans (made to both males and females) have partially supported such research reports. In this regard, we do lend to both males and females, however our policy is such that a group leader and at least 50% of a group’s members must be female.
Q: What is the average age of a JWOC borrower?
A: Most of our borrowers range from 35 – 45 years old. JWOC does not have an “age cap” policy, only a minimum age, which is 18 years old.
Q: Who is responsible for collecting loan repayments?
A: JWOC’s Scholarship Students serve as our Loan Collection Officers. You can read more about them here.
Q: How often does JWOC collect repayments from its borrowers?
A: The loan collection officers (JWOC scholarship students) collect from the borrowers on a weekly basis, every Sunday, for the entire 6-month duration of the loan. For group loans, the group leader is responsible for collecting from the other members of the group and will make a collective payment on Sunday.
Q: Does JWOC require a minimum/maximum number of people per group loan?
A: Our policy aims to have a group size with a minimum of four borrowers and a maximum of eight borrowers.
Q: Do many JWOC borrowers who have repaid their first loan apply for a second or more?
A: Yes. Once a borrower has successfully completed a loan cycle, almost all ask to complete a new application form for a future loan. JWOC continually reviews each applicant to ensure that the loan is still being used to grow the borrower’s business, is having a positive impact on their family and is still needed.
Q: Why donate to JWOC’s Microfinance programme?
A: A microfinance project is never “complete”. With each new round of applicants selected to become a JWOC borrower, there are hundreds more that still need a small business loan. While we cannot offer a loan to everyone, we would like to expand our program to help as many eligible borrowers as we are able to. Furthermore, by donating to JWOC’s programme you are investing in the education of our borrowers and our loan officers and therefore in the future of Cambodia. We recommend a donation of $100 towards our programme to grow our lending portfolio and enable us to support more families. Visit our Donate Now page to help JWOC provide loans to the local community and improve lives in Cambodia.
Meet a few of our borrowers and find out about their businesses and how JWOC is supporting them…
Read a volunteer's experience of visiting the microfinance project...
