New Horizons Bank – Mission, Philosophy and Lending Guidelines

Welcome! We're pleased you've joined New Horizons Bank as our new loan officer. We're confident you'll make great strides toward helping Good Hope Township prosper.

First, we'd like to tell you about our organization and give you the information you'll need to become a successful loan officer.

Why We Lend

New Horizons Bank is a nonprofit microfinance institution (MFI) focused on alleviating poverty by empowering low-income small-business people to prosper. We offer quality financial products and servicesthat solve immediate needs and help them achieve long-term financial stability.

Who We Lend To

We lend directly to microentrepreneurs (MEs) to help them build, grow and sustain their businesses. The size and type of business varies, as does the age, race, gender and income levels of our MEs. We are pleased to offer equal access to quality financial products for all eligible MEs..

How We Lend

New Horizons Bank offers a variety of microloan products. It's up to you, the loan officer, to evaluate the requests, calculate the ME's capacity to pay and recommend the appropriate loan.

Lending Rules:

• New Horizons Bank does not lend a larger principal amount than an ME requests
• New Horizons Bank does lend a smaller principal amount than an ME requests when a smaller principal amount is within the ME's capacity to pay and still enables them to make their intended business purchase
• New Horizons Bank lends in Micros (mcs), the local currency
• We require that our loan officers suggest a savings account to all MEs that meet the requirements.

How does an ME qualify for a loan?

Before you offer an ME a loan, you must ensure they have the financial capacity to pay, and determine if they can afford the monthly loan payment. REMEMBER: The bank's lending rules dictate that loan payments must be 70% or less of an ME's monthly net income.

Use these guidelines to calculate monthly income and expenses:

• Net Income or Net Deficit = Net Income – Total Expenses
• Net Income = Total Income – Cost of Sales
• Cost of Sales = Weekly purchases * 52 weeks / 12 months
• Total Expenses = Business Expenses + Personal Expenses

TIP: Listen carefully to each ME's story and take notes, especially on their financial data. You'll have the chance to ask two questions to determine their capacity to pay --so gather all the financial information you need to determine while listening to their story and enter it on their spreadsheet.

What kinds of products does New Horizons Bank offer?

New Horizons Bank has three loan products. Consider the characteristics of the loan, the ME's financial situation and their ability to repay the loan before choosing a loan.

New Horizons Bank also offers a Savings Account product for MEs who qualify for it.

Loan Products

Loan Name	Starter Loan (SL)	Working Capital Loan (WC)	Fixed Asset Loan (FA)
Loan Description	Helps an ME build credit quickly and is available to first-time borrowers for all kinds of business-related needs. No credit history is required for the loan, but the ME must use the funds for their business.	Allows financing for MEs who have their own business and will use the loan to purchase their own inventory, production inputs, or raw materials. Example: A carpenter uses the loan to purchase nails, wood, siding, etc.	Enables MEs to finance hard-asset purchases for their businesses. Example = A carpenter uses the loan to purchase a table saw, tool kits, or drywall equipment.
Loan Characteristics	Shorter Term: 6 to 9 months Smaller loan amount: 300 to 2,000 mcs Highest Interest Rate: 45%- 60% ME must have at least 6 months of experience managing their business	Longer Term: 10 to 17 months Larger Amounts: 1,500 to 50,000 mcs Mid-range Interest Rate: 35% to 44% ME must own their own business	Longest Term: 18 to 24 months Largest Amounts: 2,000 to XXXmcs (maximum amount depends on analysis) Lowest Interest Rate: 20% to 34% ME must own their own business

TIP: Remember where to access this table, as you will need to refer to it frequently to make the most appropriate lending decision for each ME.

Savings Account Product

In addition to the loan products, New Horizons Bank offers a Savings Account product.

Product Name	Savings Account
Product Description	New Horizons Bank encourages ME clients to open savings accounts. It's a practice that builds financial stability and can lead to long-term growth, prosperity and independence. We require our loan officers to suggest a savings account to all MEs that meet the requirements.
Benefits and Requirements	ME can open a savings account with an initial deposit of 200mcs The initial deposit must come from the ME's eligible 70% net income ME is required to keep a minimum monthly balance of 200mcs in their savings account; if the savings account balance is less than 200mcs at the end of the month, then the ME will be charged a 10mcs monthly fee Interest from the savings account is not included in the monthly income for the ME 5% annual interest on savings Access 24/7