In order to reach a broad range of borrowers as well as serve the interest of all the stakeholders (borrowers and lenders), Milaap engages in a rigorous five step process to identify and select field partners.
Milaap has broadly classified field partners into two categories based on their core business and type of relationship with their clients.
Microfinance institutions must meet Milaap's minimum requirements in order to fundraise for local borrowers:
For organizations whose core business is not microfinance, these requirements are as follows:
If an institution meets Milaap’s minimum criteria, we proceed to the application process. At this point, the institution submits documentation detailing its operations.
These documents include: by-laws/articles of the organization, organizational structure, audited financial statements of the last 3 years, portfolio reports, resumes of board and management members, organizational manuals, credit rating reports, no objection certificates/ recommendation letter from other lenders (e.g. banks) and projections for the upcoming financial year, proposed use of Milaap’s funds.
For non-MFIs, in addition to the above, the information should also include their business plan and proposed structure/method for lending Milaap’s funds.
This information is reviewed by Milaap’s Field Partnerships Manager and a screening memo is prepared for the Head of Lending Strategy to determine if the organization is a promising candidate to become a Milaap Field Partner.
If the organization makes the cut, the Field Partnerships Manager will visit the organization for on-site due diligence.
During the visit, the analyst evaluates the organization in more detail in a number of different dimensions.
To get an understanding of the quality of the organization around these dimensions, the on-site visit includes interviews with members of the management team, middle management, entry level staff (loan officers) and clients, as well as other funders (banks, grant funders etc). In addition, the manager reviews documentation, reports and the information system of the organization.
For non-MFIs, in addition to the areas listed above, special attention is paid to operational risks, past lending history, sales history, client selection and reputational risks.
Appraisal of Field Partner's Financial Reports and Ratings
Field Visits to understand operational processes
Surveys of past borrowers to understand client satisfaction.
Audit of impact assessment reporting mechanisms.
From the visit, the Manager prepares and submits a report to the Milaap’s management team to review. This report will also include level of risk associated and proposed monthly credit limit from Milaap.
The risk model and credit limit is prepared by benchmarking the organization with Milaap’s existing field partners on the same parameters.
The report is then reviewed by the management team and the social profile of the organization is also carefully studied. If the team approves an organization as a Milaap Field Partner, it will set a fundraising limit for the Field Partner and begin the on-boarding process.
Training the field partner on our operational requirements and policies constitute a significant part of our on-boarding process. Because our partners vary in size and resources, we’ve developed a tiered funding structure to accommodate their needs.
The amount a Field Partner can raise each month for local borrowers on Milaap depends on its credit limit based on the level of partnership and how much of its credit limit remains unused.