During a visit to Cantilan Bank, a team of MABS employees had the opportunity to observe first-hand how housing microfinance loans have impacted the bank’s clients. Many microfinance clients own their homes, and often have a need to make incremental repairs or improvements using whatever funds they may have saved over time if they have no access to credit. Housing microfinance loans generally mirror the way low-income households build or improve their homes in the countryside, which follow a progressive building approach. Clients often build a foundation then the walls, then add roofing, and include water, sanitation, and electricity, step-by-step. MABS participating rural banks follow the approach that clients take to home improvement and home building in the housing microfinance loan products they offer to their clients. While loans are slightly larger and longer term than typical microenterprise business loans, they are still paid back in periods of 12 months and do not require the hard collateral that characterizes the typical real estate mortgage loan.
MABS first visited Gemelyn Buisa, who secured an initial loan of P20,000 followed by a succeeding loan of P50,000 (approximately $1500 combined) to complete the flooring, walls and roofing of the concrete house that will soon be the home for her family of five. This is a significant improvement over their present Nipa house.
Ms. Buisa is a copra trader and operates a small variety store out of her house. She exemplifies the true spirit of responsible borrowing by suspending the construction of the home until the revenues from her businesses provide enough cash flow to meet additional loan payments.
Gemelyn Buisa’s new concrete house
Next, MABS visited Vivian Correos, who transformed a holding area for her pigs into a comfortable home for her family with two loans totaling P18,000 (approximately $400) from Cantilan. As you can see to the left, this is quite an impressive renovation. Never missing a monthly payment, Ms. Correos looks next to secure financing to finish the walls, improve the ceiling and replace the windows.
With a P100,000 “productive housing” microfinance loan from Cantilan Bank, Procolo Almeda upgraded the painting and flooring of his home and business. Shown in the picture to the right standing between Deputy Governor Nestor A. Espenilla, Jr. and Gerry Butardo of Bangko Sentral, Mr. Almeda repays his loan in monthly installments, but to save for his family’s future, he also makes significant deposits along with his monthly loan payments.
(from left): HMF client Procolo Almeda, Cantilan Bank Executive Committee Chairman Charles Hotchkiss, BSP Deputy Governor Nestor Espenilla Jr., BSP MSME Finance Specialist Group Head Gerardo Butardo, MABS Chief of Party John Owens and MABS Deputy Chief of Party Meliza Agabin
MABS has worked with four pilot banks, including Cantilan Bank, who have already disbursed a combined total of close to 1,500 loans worth P45M (about $1.0M), for an average housing microfinance loan of P30,000 (approximately $670). And their housing microfinance loan portfolios are continuing to grow. Training already conducted by MABS during the first half of 2010 has prepared 19 other rural banks now poised to offer housing micro-loan products to their clients.
Until next time, Mabuhay ang Housing Microfinance!