How many loans are funded from each tour?
Normally each tour funds a loan to a local woman that the tour guests get to meet as part of the trip. However, if the number of guests is over 12 people, we will split the group into smaller groups to visit different families, hence fund more than one loan. This way no guest is left out in the conversation with the borrowers as well as other tour activities.
How did you choose your current project site?
Our current project site is Phu Minh commune, Ky Son district, Hoa Binh province, about 70km west of Hanoi.
Phu Minh it a potential place for our model because of its well-preserved authentic rural lifestyle that is missed out in many other places where tourism is not properly operated. Having more than 90% of the population participating in farming work, the place exactly represents the countryside livelihoods in Vietnam.
The place is within one day trip from Hanoi which makes the tour fit in your tightest travelling schedule especially when it is not among the regular well-known tour spots in Vietnam.
Only for the past few years since the development of connecting roads to other provinces has the community had an open market replacing the previous self-sufficient economy. The villagers started diversifying their income into a variety of businesses which makes big demand for capital provision like microfinance.
I am not interested in microfinance. Should I take the trip?
Microfinance is only part of the trip, if not say it’s the procedure before and after the tour. The tour aims at giving you a unique experience of seeing how Vietnamese people are living in the countryside as well as enjoying the fresh air and peacefulness of a tranquil village nestled between beautiful mountains and lakes.
On the tour you visit a local woman and her family who will receive a loan funded from your tour fee but it is not necessarily all what you learn from them. We encourage our tour guests to feel free to ask questions about the villagers’ daily life, their plans and hopes for the future so you get to know how a typical Vietnamese family lives in the countryside. The tour also takes you to visit the local schools, medical clinic and cooperatives to learn about the education, health and economy system in the village.
Moreover, other optional activities including trekking, fishing, biking and folk games will be available at your choice to make sure you have a fun and memorable rural adventure experience with us.
Do you lend to men?
We only lend to women because we would like to extend an opportunity for women to be more pro-active in the financial livelihoods of their households, and be more formally acknowledged for their efforts.
Do you have problems from male villagers when lending only to women?
We encourage the discussion and decision-making between female and male members of the family with regard to loan decision. Once the men get to be involved in the project, they are happy with having the women take responsibility of the loan.
Interest rates charged on micro-loans
We charge an interest of 0.5% per month on declining balance. The interest is collected at the end of every month by the Women’s Union, our local partner. The interest is then managed by the Women’s Union to compensate their staff involved in this operation and to contribute toward a risk management fund. Financially, we do not rely on the interest for our organisational operations. We choose to charge 0.5% as opposed to 0% to psychologically remind our clients that the loan capital is not money given away, but clients are paying an interest to get access to the loan. The right mentality will encourage clients to invest and manage the capital more effectively.
Duration of loans
Our loan cycle is 1 year. Depending on the amount of the loans, the repayment schedule will be half instalment every 6 months or full instalment every 12 months.
Average size of loan in portfolio
We offer standard loan sizes of US$100 for first-time borrowers, US$200 for second-time borrowers, up to US$400. At the moment, around half of our clients are first-time borrowers and half are second-time borrowers.
What is the expected default rate? What has been the default rate?
The expected default rate is 2%. The actual default rate until now is 0%. We do have around 6% of late repayment, that is, borrowers asking for an extension of 1-3 months from the due date.
How do you know if loans are being used for intended purpose?
Our loan officers are in the community on a weekly basis to visit clients and take updates of their successes or struggles. These narrative and photo updates are also shared with tourists who funded the loans.
If I am a farmer looking for a micro loan, what do I need to do to get a loan?
The farmer would need to inform the Women’s Union representative of her village, who would then inform Bloom loan officer and go with the loan officer to visit the farmer for an on-site initial assessment. During this on-site initial assessment, we will collect information to assess the repayment capacity of the farmer based on a comprehensive understanding of her family structure, sources of income, household cash-flows, projections, previous credit experience, and so on. The on-site initial assessment will be followed by loan appraisal, based on which loan decision will be made. There is no minimum level of income required as statistics are normally not verifiable in Vietnamese rural setting. Rather we take into account the comprehensive economic profile of the household.