Loan/ Credit provision is the other primary undertaking in Awach SACCOS. All members have an equal right to benefit from the credit service. Apart from fulfilling the pre-credit requirements in the bylaw, Awach’s loan committee and loan department take various factors mentioned below before deciding on each credit application. Segregation of duty during the loan approval process clearly applies because once the loan committee approves a particular case; the request will be authorized by the board chairman and finance manager before effecting any payment.
Requirements to get a loan
- The member should save regularly for at least six consecutive months that amounts 25% of the requested/needed loan amount. If the loan is for starting or expanding a business the pre-loan saving amount will be 30% of the total loan.
- For a house or a vehicle loan, a member has to save at least for a year. The pre-loan saving for a house loan is 30% and 40% for a vehicle.
- Should bring a letter from her/his employer institution that specifies the monthly income of the member.
- Business operators should bring a renewed trade license and cash flow statement that indicates their monthly cash flow.
- Should bring guarantee for the loan.
- Should bring one member from the cooperative as a guarantee. Should be willing to pay 1% service charge and 1% insurance.
- Should be willing to pay 1% service charge and 1% insurance.
- A member could take up to 400,000 (four hundred thousand) Ethiopian birr loans for social purposes, health, and education.
- A member could take up to 600,000 (Six hundred thousand) Ethiopian birr loan to start or expand a business.
- A member could take up to 1,000,000 (one million) Ethiopian birr loan to buy a car for business.
- A member could take up to0 800,000 (Eight hundred thousand) Ethiopian birr loan to purchase an automobile.
- A member could take up to 2,000,000 (Two million) Ethiopian birr to buy, construct or maintain a house.
The loan interest rate is 13.5% per year for social, health, and education loans, 14.5 % per year for automobile loans and business loans. 15.5 % per year for a house loan. The interest is paid on the remaining loan balance and the system of calculation is called Amortization.
Loan disbursed and collection
Currently, Awach has disbursed a loan that amounts to over 1.32 billion Ethiopian birrs for more than 14,918 members. A thorough post-credit evaluation shows that more than 99% of credit users have utilized their loans to open their own shops, construct houses used for renting, own business cars, and most members are able to participate in different business activities to increase their income. Awach’s credit service has benefited its women members in many ways. Numerous women members have an exit out of destitution, started supporting their family and quite several women expand their business by multiplying their investment.