Expansion of Microfinance program

Summary

Serving microfinance clients in rural parts of El Salvador

PADECOMSMCREDITO is the microfinance offspring of PADECOMSM NGO which was created after the civil war to bring social and economic development to a part of the country whose inhabitants suffered much from that war. The MFI was founded in 2006 and by the end of 2015 had a loan portfolio of approximately USD 11,2 million and 6.723 active borrowers, 46% of which are women.

Goals

  • MFI with increased loan portfolio

Background

PADECOMSMCREDITO, whose head office is located in San Francisco Gotera, has a strong regional presence in the department of Morazan. Its main shareholder is the fouding NGO PADECOMSM, which was created to address the needs of the poor after the devastating civil war. It’s mission: ‘We are an entity specialized in accessible and appropriate financial services for micro and small entrepreneurs, with economic return and social responsibility; thus contributing to the improvement of living conditions of our clients’. At the centre of the organization, and imbedded at all levels, is the strong commitment to client attention. It does not distinguish itself from competitors by the conditions of their loans and other products, but in the way the client is being dealt with. This means knowledge about the clients’s business, their needs and the ability to process clients’ loan applications as fast as possible, providing the loans at the time they are really needed.

Initial situation

By the end of 2015 the organisation had a loan portfolio of approximately USD 11,2 million and 6.723 active borrowers, 46% of which are women.

Goals

PADECOMSMCREDITO has shown consistent growth over the years. In the coming years it wants to open more branches in its area of operation (it does not have the ambition to be active in the whole country), further strengthen its internal organization and introduce new products like credit card, pensions, voluntary savings and insurance). To fund the projected expansion of the loan portfolio, Cordaid has approved a loan of USD 0,75 million. With an average disbursed loan size of USD 1.390 our loan will serve approximately 540 clients, most of which are located in rural areas.

Goals

  • MFI with increased loan portfolio

Target group

PADECOMSMCREDITO serves primarily rural clients (5 of the 6 branches are in rural areas). It is serving micro and small enterprises, with a range of loan products. The conditions of these loans are tailor-made (duration, repayment mode, collateral requirements) for the kind of business whose financial needs they serve. By the end of 2015, 17,5% of its gross loan portfolio was invested in agriculture, 56,5% in commerce, 1,5% in industry and 24,5% in services.

Project plan

The organization is implementing its Strategy Plan 2016-2019.

Sustainability

PADECOMSMCREDITO is offering their clients a broad range of loan products, with different conditions, depending on the type of business of the client. Apart from loans, it is offering savings products and has started recently with insurance and a pension saving scheme. Bringing these products to clients that have problems linking to the banking sector, is of great importance to them. The institution itself applies a sustainable business model. Since its start it has been operating with a profit, maintaining a loan portfolio of good quality, which enables the organization to build up solvency and invest in the future.

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