Loans are channeled through NGOs, credit organisations, financial and other institutions including banks. SFD helps these organisations with, for example, seed money for loans, capacity building of the organisation and enforcing legal actions where required.
Business development services (BDS) is also channeled through a variety of intermediary organisations such as NGOs or trade associations.
SMED also provides support in the following areas:
- The promotion of microfinance in Yemen through events such as trade fairs, conferences & seminars
- Technical and socio-economic studies
- Promotion of best practice and advocacy for supportive national policy, laws and regulations
- Capacity building of NGOs and private institutions
- Training courses in microfinance and enterprise development
To be eligible for support, intermediary savings and credit organisations must be:
- A legal entity and be registered under Yemeni law
- Have statutes that have been approved by the Yemeni General Assembly with joint or shared liability of external financial commitments held in common by shareholders or members.
- Have appropriate loan tracking systems in place
The intermediary financial organisation also has to make sure that those that borrow money are Yemeni citizens, are of legal age, have an income-generating enterprise, be of good character with no criminal record and not registered as bankrupt. The individual borrowers should not have outstanding debts from other sources and if they have previously borrowed should have a good credit history.
The intermediary financial institution will also need to:
- Sign a loan contract with SFD
- Appraise requests for loans
- Sign a loan contract with individual borrowers
- Organise the disbursement of loans, collect repayments and follow up
- Inform SFD of any events that prevent repayment
The loan contracts made with borrowers need to meet the following conditions or criteria:
Co-financing is needed from either the intermediary organisation or the final borrowers—the intermediary or final borrower must provide some of the funds for the proposed business.
The intermediary may be asked by SFD to provide collateral, possibly in the form of removable assets, to act as security for the loan.
Loans made must be short term in nature and wherever possible loans should be released in instalments and repaid monthly.
Saving is seen as an important part of the program and borrowers should show that they have been able to save.
Criteria and procedures also exist where non-financial assistance is provided by SFD.