Zero Kap

Zero-Kap is a named fund under FEMI. The fund provides loans to people in developing countries who find themselves in structural poverty, but who have ideas and plans to break the cycle of poverty. Zero-Kap offers them access to financial resources when they do not (yet) have access to these locally.

Method

Zero-Kap aim is to provide credit to groups of people who are organized in associations, cooperatives or other types of legal entities where in principle collective decision making takes. In addition, one should not be able to get funding in another way (i.e. other funds, local banks and/or subsidies).

In general, a Zero-Kap loan varies between € 10,000 and € 50,000. Rather than the size of the project, Zero-Kap focusses on local small scale projects with a direct impact on employment and livelihood of the people involved.

The borrowers may choose from a Euro loan without interest or a loan in local currency with a relatively low interest rate to hedge the currency risk.

Zero-Kap is a fund with a small, skilled project committee and a larger group of experts: volunteer advisors. A loan application review is carefully prepared by one of the advisors. The application is reviewed using a scoring method in which the business plan, the socio-economic impacts, the risks of success and redemption are further discussed with the applicants. Following a (positive) advice, based on this extensive review, by the advisor, the project committee decides whether the loan is granted.

Once the loan is granted, a local monitor maintains contact with the borrower on behalf of Zero-Kap on the progress of the project. In addition, the Zero-Kap project advisor will remain closely involved in the project.

To apply for a loan:

If you would like to apply for a loan, please use this Requestform

If your project meets the following criteria and the procedure meet your requirements, please submit a loan request via this application form. The project committee of Zero-Kap will than review your application.

Criteria:

  • The credit goes to organized groups of disadvantaged people with a high degree of autonomy.
  • The applicant, or possibly an intermediary organization, must have a well-researched business plan, proving that big opportunities and risks are manageable and improve the socio-economic situation of the participants long-term.
  • The credit promotes employment and thus increases the income of the beneficiaries.
  • The recipient of Zero-Kap credit cannot otherwise obtain an affordable credit.
  • A guarantee of repayment is strongly desired.
  • An independent monitor on the ground is a requirement. The monitor visits the project according to the scope of the a monitor proposal which is signed by all three parties. The monitor reports on project progress to Zero-Kap, including repayment capacity.

A Zero-Kap loan has the following characteristics:

  • The loan is provided in local currency or in Euro’s. In case of a Euro loan Zero-Kap requets no interest; In case of a local currency loan, an interest will be charged (up 15%) to hedge the currency risk.
  • The loan runs up to a maximum of five years, excluding a grace period.
  • The maximum value of a loan is EUR 50,000.
  • Costs of monitoring will be paid by the borrower.
  • It is a loan and not gift; The loan should be repaid.
  • There must be a realistic repayment possibility in the country of the borrower (i.e. repayments to a foreign bank account should be allowed).

Application review and granting of the loan

To be able to obtain a loan based on a proper application, the following procedure is followed:

The applicant submits an application via the website using the application form. In addition to the application form a business plan, annual figures of the last 2 -3 years and a budget should be attached.

Subsequently, the Secretariat of Zero-Kap assesses the application on completeness and makes an initial selection based on the above criteria.

When the application meets this initial assessment, the application will be forwarded to a project advisor. He / she works with the applicant on the loan application with some follow-up questions.

The consultant then provides an advice to the project committee of Zero-Kap. As a final step the project committee decides whether the loan is granted or not. This meeting takes place three to five times a year.

In case of a rejection either the advisor or the Secretariat shall inform the applicant as soon as possible after the decision.

When loan is granted, all necessary documents will be prepared for signing (i.e. loan and monitor agreement) and either one the advisor or a project committee member will be appointed as project supervisor. He / she is the contact person with Zero-Kap for the project.

Processing of the application may vary from several months up to a year. To keep costs down all communication will be via e-mail, telephone and/or Skype, except for the necessary formal documents which will have to be send by (registered) mail.