Performance Team

Proposals & Updates

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.

Main Focus

• Sustainability

Why do we want to be sustainable?

So we can help more people.

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

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.

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.

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 Clients will want to know what happened.

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)

Sustainability

• 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)

Current Records

Sustainability

• 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

Current Records

• The Top 50% of our outstanding portfolio is owed by 5 clients

Sustainability

Spreadsheet detailing the value of expenses and income for each month

Here are the cumulative Results

Income

Sustainability

Spreadsheet detailing the value of expenses and income for each month

Here are the cumulative Results

Income

Expenditure

Sustainability

Spreadsheet detailing the value of expenses and income for each month

Here are the cumulative Results

Income

Expenditure

Net Profit

Sustainability

Note the Distinct periods in our history

Group Loan Program

Zero-Collateral Program

Last Rule Change(3000L Cap)

Sustainability

Our % of Principal Outstanding

Group Loan Program

Zero-Collateral Program

Last Rule Change(3000L Cap)

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

SustainabilityREPETITIONS

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 begun

simultaneously into a given Model.• On reaching the maximum loan level, Profit is assessed• Basic premises are standard for each model, and can be viewed

on our blog if you wish to confirm our findings

SustainabilityREPETITIONS

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 toSatisfy 100 eligible clients. With Historical repayment rates,$11,002.70 was earned, with a net profit of $(960.02)

SustainabilityREPETITIONS

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 spentMore and earned less than the simulated version of the CurrentModel.

SustainabilityREPETITIONS

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 repeated

incrementsResults

2 Repetitions proves that repetitions assist profitability, butAllows little room for poor repayment. While the model showsAs being profitable, the profit margin is very low and even a slightIncrease in the repayment factor greatly affects profitability

SustainabilityREPETITIONS

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 repeated

incrementsResults

The more repetitions, the greater the margin for poor repaymentAnd financial stress. This model confirmed that Repetitions areAn invaluable part of any new loan program. This verifies what isAlready standard procedure in other Microfinance programs.

Sustainability2000L CapShortened

LadderBasic 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

SustainabilityNew 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 our

clients into greater fiscal responsibility• A Cap of 2000L to limit the financial burden of the personal loan program and protect

our clients from the dangers of Debt.• A Penalty Program in which clients that fail to repay a loan before the write-off period

are effectively removed from the program, and must start again at 500L if they pay itback.

SustainabilityEconomic 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

SustainabilityEconomic 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.

SustainabilityFast Track Program

One problem, as pointed out by Dr. H over the summer, is that shortened loan increments wouldRestrict clients that have a relentless drive to succeed. The Fast Track Program is our solution toThis.

• 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 funds

they need, faster.

SustainabilityCatastrophic 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 have

no outstanding loan (Note: Loans can be forgiven in some circumstances)• Loan features an 18 Month repayment schedule, delayed for 3 months after

application 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

Sustainability

We Need to Start working NOW so sustainabilityIs achieved AS SOON AS POSSIBLE.