Forum > Announcements > Credit risk payments
Starting this week, new loans will be asked to make a 10% credit risk payment into the Members Loan Fund.
Zidisha is a nonprofit organization, and we continue to be committed to maximizing value for our members rather than generating profits for the organization. As with the membership fees for first-time borrowers, 100% of the credit risk payments will be credited back to the pool of lending capital; none of it will go to Zidisha's staff or operating expenses.
Up until now, Zidisha loans have carried only a 5% service fee. This has kept the loans very low cost, and thanks to our lean operating budget, has been sufficient to cover the expense Zidisha incurs to administer the loans.
The problem with the very low fee structure is that it limits our ability to grow the supply of lending capital. Since most of the 5% service fee is needed to cover operating costs, it cannot be credited back to the lending fund. As a result, our supply of lending capital is not growing quickly enough to accommodate all of the borrowers who are applying for funding.
Historically, we have filled the gap by raising donations. However, our community has now grown to the point where we need larger amounts of capital than is normally given as a donation.
Returning credit risk payments to the pool of lending capital will help us fund more loans in two ways: 1) it will directly grow the supply of lending capital via compound growth, and 2) it will make us better placed to raise funding from impact investors and others who are looking for a modest financial return, or need to preserve the value of their capital against inflation and currency exchange losses.
Many in this forum have commented that they would prefer to pay higher fees in return for greater certainty that their loan applications would be funded. The intent is that this change will improve our long-term growth potential, so that we can continue to be a reliable source of lending capital for our members.
Edit: As of March 11, the credit risk fee is waived for first loans, because the membership fee is already being deducted.
There is joy in my heart as I read this message and I'm glad that there is new hope for we the borrowers. I say thank you to Director Julia. God richly bless and reward all your efforts in your quest to make the have not find something meaningful doing with the assistance of Zidisha micro lending.
Day and night I'm short of words to express my gratitude to God for you, for your mission and vision about Zidisha. Your introduction of Zidisha was timely and the best in micro lending to save those in the developing countries.
My prayer always is that God Almighty protects you, the Zidisha Team members and all the Lenders for the years ahead, and that all proposals to increase donations into Zidisha be successfully.
Thanks to Julia and her team. You do not hesitate to let us know the problems that arise at Zidisha.You are always ready to find a solution with your team.I have no words to describe your person. But allow me to tell you that God bless you.
Director weldone. This is a prudent measure to entice lenders and to sustain this scheme. Is a win win situation for all
Julia,may I know the criteria for selecting a loan which is to be found from the wait list.?
My second question is that if a loan found in the projects loan expires without funding ,is the person's loan going to be amount the waiting list or will be automatic reactivate?
Thank you julia director, very useful information for all members of zidisha, zidisha remains best
Translated by Google
Terimakasih direktur julia , informasi yang sangat berguna untuk semua anggota zidisha , zidisha tetap terbaik
Thank miss julia and team..
best regards from us in indonesia..
I am burhan from jakarta indonesia ..
I joined zidisha already 5 months, but I just learned about zidisha now ..
I want to ask about payment,
where there is a new regulation called credit risk..
with the presence of zidisha is very helpful to my business,
but why am I paying bigger?
amount requested = 10.000 IDR
service fee 5% = 500 IDR
credit risk 10% = 1.000 IDR
Amount you receive
after deduction = 9.850 IDR
and then i must pay = 10.000 IDR againt..
Which means I pay 15% interest ..
total we have to pay indirectly 30% ..
first 15% at the beginning of the loan, and 15% at the end of the loan.
can it be explained?
That true miss julia
Hi Burhanudin, the total cost in your example would be 15%. What does "and then i must pay = 10.000 IDR again" reference?
Also, Burhanudin, you don't pay interest on any Zidisha loan; you pay only fees. I realize this may be just an error in the automated translation? In case not, though, I provide the following clarifications:
All Zidisha loans are extended at 0% interest rate.
Zidisha charges only fees: 5% Service Fee, plus now the new 10% Credit-Risk Fee = 15% in Fees.
There also may be a one-time Membership Registration Fee charged when a borrower first joins.
And there may be a refundable "Members Loan Fund" (MLF) deposit fee charged; however, the MLF deposit fee is optional, in exchange for reaching a higher credit limit faster; it is not a mandatory fee.
Lastly, another optional fee may be the Expediting Fee, sometimes available. It is my understanding that that fee can be 15% in some cases. Is that perhaps what you meant by another 15%, Burhanudin?
P.S.: Zidisha staff compensations (for the two paid members of the staff: the Director and the CTO), are part of the platform's operating costs, so I would say "...none of [this new fee] will go to Zidisha's staff or *other* operating expenses." ;-)
P.P.S.: I am away for the next several weeks, but am just in here briefly today to update another similar post, a previous post of mine (clarifying about fees).
Thanks a lot Julia ,think the move will be positive, I have already made 4 applications now without funding,the most recent expired yesterday with only 1% funding, I now believe that this good change will see my application through this time round
I totally agree with you on this initiative. There is an urgent need for raising the lending capital and this should also be on our shoulders as borrowers, otherwise, these noble idea will not be sustainable and most loans may continue getting less than 100% funding.
Thank you for the changes you made to a better Zidisha
hopefully in the future more and more members who smile happy because the loan is funded and reduce the sadness story caused by the loan expired repeatedly.
HAPPY INTERNATIONAL WOMEN'S DAY (March 8, 2018) for you and other "women warriors" behind the scenes of Zidisha
"Optimism is the faith that leads to achievement."- Helen Keller
"Think like a queen. A queen is not afraid to fail. Failure is another stepping stone to greatness."- Oprah Winfrey
Below an example of a new loan with a credit risk payment.
Thank you for this example.I welcome this good idea which will help zidisha.
So the total cost per loan application is 15%? Is it one time, refundable...?
Its a good idea for growing the company but with both negative and positive impacts.
I think every loan fee will be 15%, Not just one time but on every loan we apply. I don't think credit risk refundable eventhought that payment sent to member loan fund. The name it self already different.
I maybe wrong understanding Julia information.
It's no longer worthy, other profitable lenders are no cheaper
Thanks also for joost
Terimakasih juga untuk joost
This is not a good idea for us Kenyans, banks charge fee of 14% interest and now you are charging 15% what is the difference now. As you say its non profit.......its not non profit as per the percentage you imposed. If it was a must you could have charged new members or just charge 10% or less. Even self help groups in Kenya charge to its members to loans less than or equal to 10% interest. This cant boost young interprenuers and the organization to serve as to the objective you started. This is discouraging
Point of correction, Banks charge 14% per year besides other charges. Zidisha's rate is 15% even if the loan takes more than one year to repay and to me that makes a big difference between the two lenders.
Thank you director for your innovative idear
I think any change that will benefit the borrower and also lead to the sustainability of the organization Is welcomed. At the end , we want to see our loans funded. Thank you.
I support this initiative because it would improve the operationalability of Zidisha and speed up the waiting time of processing loans.
A good initiative will also help in sorting out serious people and reduce bad debts
Thank you very much for coming up with ways and ideas that will make Zidisha a better place. I have been following your announcements and I can see you are very wise and open to the members advice. This idea is also a way for us (borrowers) to even give back to Zidisha and even feel part of the organization in a very special way. We need not just to be happy and content that we have been assisted, we also need to be willing to assist others, of which I see this as being one of the ways. As we grow, we learn and improve the way we do things. When lending capital grows, loan funding will not be delayed. At times when you post for a loan to be funded, you don't just budget for funds but also time. Some delay may make one not to hit the target that they have planned for. This idea is good and welcomed. Thanks.
Thank you madam Julia for at long last finding a lasting solution to the problem at hand which was lending capital to fund loans. I think this initiative will motivate more lenders investors and individual to come on board to support and l am happy that madam Julia, Laurie and the entire staff have vision for long life span for this honourable community. Please madam Julia l would also plead with you to improve the system too much error here and there and also countless decline of loans without concrete bases thank you and may God bless Julia, Laurie and the entire staff
Happy International Women's Day, Madam Director. You remain a heroine to be ever celebrated globally and eternally. I also express my gratitude for introducing a very wonderful measure for the betterment of Zidisha fraternity. I am sure that the move will enhance the operations and address the many prevailing gaps. I am sure the move offers tripartite benefits to the Lenders, Members and the Zidisha Team. Kudos!
I support the initiatives 100%. I hope that will be of interest of both the lenders and the borrowers and Zidisha organization as well.
it will not benefit much to borrower as this will encourage people with bad faith to be defaulters. I dont know how loan interests are charged in your country but 15 % for what you borrow in the name of empowering intreprenuers will not help a small business. but i respect you decision bro.
I believe the effort on actualizing this idea is welcome and a good one of course for us all. We hope it will turn around the fortunes of our noble organization and its going concern. I have also been on one accord with this suggestion, higher fee in return for greater certainty and certainly that !
I only received 10zmw but I agreed to receive 60 and pay back 500zmw can you help me with this
We thank you for the continual building of confidence and hope for borrowers. We pray for your support to grow our businesses. Thank you team zidisha
Waaoh!!!What an amazing idea.At long last ,a long waited innovation has been put in place.This is a big joy to all of us borrowers.ASANTE (Thank you) madam director and the team.God bless you all.
Thank you madam,
This means the total cost of a loan is 15%?. This is still the same rate we get microfinance loans here in Kenya especially mobile money loans from the likes of Tala, Branch, Saida,Haraka,Okolea etc
Good comparison though but bear in mind that mobile money loans of 15% per annum (pa) is not the same as Zidisha loan of 15% flat with adjustable repayment plan allowed.
You're correct, Christian. Although the higher fees distress me; even so, it still is a better deal than banks, which typically charge fees *and* high interest rates... *and* which also do not offer the flexibility of adjusting installment amounts. Zidisha still is better.
I and many others miss the way it was here in 2015 and even into part of 2016, but as Julia mentioned, things are different here now because of the number of borrowers applying, which is outpacing lenders' ability to fund loans quickly or sometimes at all.
Also, it would help a lot if every borrower would honor their obligation to lenders and to Zidisha. The platform makes it as easy as possible to do that (with 0% interest rate, and flexible installments). Anything within Zidisha's guidelines that VMs can do to help ensure that "mentees" live up to their obligations would help a lot. Thank you for all of your efforts! :-)
Thanks and congrats Madam Director and team for coming up with this great initiative. It'll automatically go a long way in speeding up and maximizing the number of loans fully funded. Kudos for this and be blessed.
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