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Performance Team

Performance Team. Proposals & Updates. Update on Octopus. Limited by continuing problems such as sustainability, lack of server space, and non-standard business operations.

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Performance Team

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  1. Performance Team Proposals& Updates

  2. Update on Octopus Limited by continuing problems such as sustainability, lack of serverspace, and non-standard business operations. Implementing Octopus is a continuing effort, and Performanceteam is putting its full energies to resolving all obstacles to full implementation.

  3. Main Focus • Sustainability Why do we want to be sustainable? So we can help more people.

  4. Main Focus • Sustainability If La Ceiba earned $1.00 for every $1.00 Spent (Stable) • There would be a cap on the maximum number of people reached,the amount of help we could provide would be limited

  5. Main Focus • Sustainability If La Ceiba earned $1.00 for every $1.00 Spent (Stable) • There would be a cap on the maximum number of people reached,the amount of help we could provide would be limited If La Ceiba earned more than $1.00 for every $1.00 Spent (Sustainable) • The number of people La Ceiba could affect would be increasing, as additionalrevenues could be put toward additional loans.

  6. Main Focus • Sustainability If La Ceiba earned $1.00 for every $1.00 Spent (Stable) • There would be a cap on the maximum number of people reached,the amount of help we could provide would be limited If La Ceiba earned more than $1.00 for every $1.00 Spent (Sustainable) • The number of people La Ceiba could affect would be increasing, as additionalrevenues could be put toward additional loans. If La Ceiba earned less than $1.00 for every $1.00 Spent (Unsustainable) • The number of people La Ceiba could affect would be decreasing,and would eventually become Zero.

  7. Main Focus • Sustainability If La Ceiba earned $1.00 for every $1.00 Spent (Stable) • There would be a cap on the maximum number of people reached,the amount of help we could provide would be limited If La Ceiba earned more than $1.00 for every $1.00 Spent (Sustainable) • The number of people La Ceiba could affect would be increasing, as additionalrevenues could be put toward additional loans. If La Ceiba earned less than $1.00 for every $1.00 Spent (Unsustainable) • The number of people La Ceiba could affect would be decreasing,and would eventually become Zero. REALITY: La Ceiba loses $0.52 for every $1.00 Spent (Very Unsustainable) • The number of people La Ceiba can affect will eventually become Zero, and the investors, donors, and especially Clientswill want to know what happened.

  8. Sustainability Current Records • 41 Clients • 122 Loans • $15,907.74 USD in total Loan Principal • $11,523.19 USD in total Loan Program Income • Net Profit of $(4,384.55)

  9. Sustainability Current Records • 41 Clients • 122 Loans • $15,907.74 USD in total Loan Principal • $11,523.19 USD in total Loan Program Income • Net Profit of $(4,384.55) • 2.98 Loans per client • Average Principal per Loan: $130.39 USD HNL 2,449.79 • Average Returns per Loan: $94.45 USD HNL 1,774.57 • Average Profit per Loan: $(35.94) HNL(675.22)

  10. Sustainability Current Records • 41 Clients • 122 Loans • $15,907.74 USD in total Loan Principal • $11,523.19 USD in total Loan Program Income • Net Profit of $(4,384.55) • 2.98 Loans per client • Average Principal per Loan: $130.39 USD HNL 2,449.79 • Average Returns per Loan: $94.45 USD HNL 1,774.57 • Average Profit per Loan: $(35.94) HNL(675.22) • 30 Loans in the write off period constitute 67% of all outstanding value • 33 Loans have been paid on time • 52 Loans are in the Delinquent period, constituting 29% of all outstanding value • 7 Loans (4% of value) are in the Default period • The Top 50% of our outstanding portfolio is owed by 5 clients

  11. Sustainability Spreadsheet detailing the value of expenses and income for each month Here are the cumulative Results Income

  12. Sustainability Spreadsheet detailing the value of expenses and income for each month Here are the cumulative Results Expenditure Income

  13. Sustainability Spreadsheet detailing the value of expenses and income for each month Here are the cumulative Results Expenditure Income Net Profit

  14. Sustainability Note the Distinct periods in our history Group Loan Program Zero-Collateral Program Last Rule Change (3000L Cap)

  15. Sustainability Our % of Principal Outstanding Zero-Collateral Program Last Rule Change (3000L Cap) Group Loan Program

  16. Sustainability How do we reverse the trend and become sustainable? • Repeat levels along the Loan Ladder • Reduce the increments on the loan ladder • Lower the Cap to 2000L

  17. Sustainability REPETITIONS Basic Premise: Each Loan Level is Repeated Study: “New Loan Ladder Model” (On the Performance Team Blog) • Repayment statistics were calculated in other studies • Using these statistics, 100 hypothetical clients were begunsimultaneously into a given Model. • On reaching the maximum loan level, Profit is assessed • Basic premises are standard for each model, and can be viewedon our blog if you wish to confirm our findings

  18. Sustainability REPETITIONS Basic Premise: Each Loan Level is Repeated First Model: Current Loan Program Assumptions • 2000L Cap • 500L Loan Increments Results The current loan program, under the modeling conditions, Is not profitable. The model spent $11,962.72 in Principal to Satisfy 100 eligible clients. With Historical repayment rates, $11,002.70 was earned, with a net profit of $(960.02)

  19. Sustainability REPETITIONS Basic Premise: Each Loan Level is Repeated Second Model: Current Loan Ladder with Shortened increments Assumptions • 2000L Cap • 250L Increments • Repayment Statistics were averaged for new increments Results This model showed the need for Repetitions, as reducing the loan increments does not help profitability. This model spent More and earned less than the simulated version of the Current Model.

  20. Sustainability REPETITIONS Basic Premise: Each Loan Level is Repeated Third Model: Loan ladder with one additional repetition Assumptions • 2000L Cap • 250L Increments • Loan increments performed twice • Repayment Statistics were averaged for new increments • Repayment statistics were reduced by a factor for repeatedincrements Results 2 Repetitions proves that repetitions assist profitability, but Allows little room for poor repayment. While the model shows As being profitable, the profit margin is very low and even a slight Increase in the repayment factor greatly affects profitability

  21. Sustainability REPETITIONS Basic Premise: Each Loan Level is Repeated Fourth and Fifth Model: Loan ladder with 2 and 3 additional repetitions Assumptions • 2000L Cap • 250L Increments • Loan increments performed twice • Repayment Statistics were averaged for new increments • Repayment statistics were reduced by a factor for repeatedincrements Results The more repetitions, the greater the margin for poor repayment And financial stress. This model confirmed that Repetitions are An invaluable part of any new loan program.This verifies what is Already standard procedure in other Microfinance programs.

  22. Sustainability 2000L Cap Shortened Ladder Basic Premise: No Personal Loans higher than 2000L, loan increments of 250L • Cap ensures financial security of MFI while protecting our clientsfrom excessive debt burden • Loan increments ensure a longer credit history for less risk on future loans • NEITHER OF THESE SAFEGUARDS ENSURE PROFITABILITY WITHOUT REPETITIONS

  23. Sustainability New Personal Loan Program Characteristics of a Performance Team endorsed Loan Program Include: • 3 Repetitions for balance between financial security and client-minded operations • Smaller Loan Increments to build a credit history and reduce risk, while easing ourclients into greater fiscal responsibility • A Cap of 2000L to limit the financial burden of the personal loan program and protectour clients from the dangers of Debt. • A Penalty Program in which clients that fail to repay a loan before the write-off periodare effectively removed from the program, and must start again at 500L if they pay itback.

  24. Sustainability Economic Activity Loan Program Why Change the Economic Activity Loans?: • Current program has little in the way of financial safeguards for ourselves or our clients • Current program deals in absurdly large amounts, given our poor profitability • Current program does little to encourage entrepreneurship or teach business skills

  25. Sustainability Economic Activity Loan Program Characteristics of a Performance Team endorsed Economic Activity Loan Program Include: • Application process including Business Plan and Credit History evaluation • Fixed loan periods of 6 or 12 months to illustrate financial schedules for aspiring entrepreneurs. • A Cap of 5000L to minimize financial burden to La Ceiba and maximize specialization • Overlapping Loan Levels • 2500L First Loan • 2500L – 4000L Second Loan • 2500L – 5000L Third and subsequent Loan • No Higher Loan Levels are recommended at this time • Lets specialize and become profitable first, and see how this program works. • Penalty system should include zero tolerance for repayment in the “Write off” • Clients must repay outstanding loan before re-applying • Clients must re-do EAL application process (With new business plan) if EAL is requested • Otherwise only eligible for maximum personal loan of 2000L.

  26. Sustainability Fast Track Program One problem, as pointed out by Dr. H over the summer, is that shortened loan increments would Restrict clients that have a relentless drive to succeed. The Fast Track Program is our solution to This. • Beginning at the 1000L loan level, clients could apply to enter the EAL program • Would be held to higher standard on account of shorter financial history • Would permit clients with reliable repayment history to receive the fundsthey need, faster.

  27. Sustainability Catastrophic Loan Program This proposal centers around disaster relief, and can be potentially implemented independentof other proposals. • Features a Balance maintained by La Ceiba not to exceed 9000L at any given time • Loans would be provided to victims of an unforeseeable catastrophe who haveno outstanding loan (Note: Loans can be forgiven in some circumstances) • Loan features an 18 Month repayment schedule, delayed for 3 months afterapplication is approved, so clients can recover without undue financial burden • Features 15% Annual interest rate, so as not to excessively increase financial stress • Would be dispersed in 1500L or 3000L Increments • Far superior to Grants

  28. Sustainability We Need to Start working NOW sosustainability Is achieved AS SOON AS POSSIBLE.

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