How does Hermanus Siyakha work?
- Micro-business entrepreneurs from the Overstrand region submit loan applications for zero interest loans to the Hermanus Siyakha
- After an initial screening of the application, eligible business owners are given the opportunity to present their business case, Dragon’s Den style, to a Hermanus Siyakha adjudication panel
- Business cases that are deemed to show potential for long term success and job creation, as well as high probability to meet loan repayments, are approved for funding
- Funds are sourced from the community of the Overstrand and beyond through the Hermanus Siyakha website via it’s crowdfunding platform
- Once the target funding amount has been achieved, the project is initiated and the loan is disbursed, an experienced mentor is assigned to work with the business owner to increase their chances of success in growing their business and repaying their loans
When will my loan be repaid?
- Funds are committed for the duration of the project (typically between 6-12 months). Repayments to lenders are made when the loans have been repaid by business owners at the end of the project period. Early repayment of the loan is not possible.
What if I can’t fund a project fully?
- You are free to loan any amount that suits you, starting from R500. Multiple people can make loans to a single project to achieve the required/targeted funding amount.
Can I invest in more than one project?
- Yes! You can loan to one project, or spread your loan to cover multiple projects.
What happens to my loan if the business doesn’t perform?
- Whilst all projects are set up to succeed through a combination of training, coaching and mentorship, should the the project fail (partially or fully) then lenders will not receive full repayment of their loan but a pro rata repayment in the event of a partial failure.
Will I have an opportunity to assist a business owner?
- We are always looking for volunteer mentors. Your efforts will be much appreciated by the business owners.
Is my loan tax deductible?
- Since the nature of the loan is that it will be repayed after the project ends, it is not classified as a tax deductible donation by the Receiver of revenue.
Are you Section 18A approved?
- We are in the process of applying for Section 18A tax status.
Why is no interest charged on loans?
- If interest is charged on the loans that makes it more difficult for the borrowers to repay, and might encourage them to approach “loan sharks” for money to pay off the initial loan. We want recipients to enter the more formal economy and make this as easy as possible.
Why are loans preferred to grants?
- We want to give a “hand-up” not a “hand-out”, hence interest-free loans rather than grants. Loans restore dignity, acknowledge the worth of the recipient and serve as vehicle to train in financial literacy and cash flow management, aspects that grants do not facilitate.
How are beneficiaries identified?
- We work with our Partner Organizations to identify those entrepreneurs that they have trained and set up in business by way of an initial grant and who need an additional injection of capital to take their enterprise to the next level.
- In addition we work within the target communities via field operatives to identify existing business enterprises that we can assist in a similar manner.
- All applicants go through a careful screening process to ensure that they are reliable and that the enterprise has a strong likelihood of success, and each successfully funded borrower is linked to a mentor who provides assistance and the necessary support.
How do you know this strategy works?
- This model of financial assistance has been successfully implemented on a large scale internationally with organizations such as Grameen Bank, Kiva, Hope International and more locally with the Small Enterprise Foundation.
- Not only has the system of small loans assisted many in poverty to improve their living standard, but the repayment rate on these loans is generally well above 90%.
What happens if a project is not fully funded?
- If a particular project is not fully funded, the directors can exercise a number of options:
- They can recommend that the loan not be granted due to insufficient funds. In this case lenders will be asked if they wish to identify another project to which they would like to loan.
- They can authorize a partial loan up to the amount that has been funded.
- They can top up the amount received using unallocated donations to Hermanus Siyakha.
Does Hermanus Siyakha monitor and mentor borrowers?
- Applicants who are successful in securing a loan are allocated to a mentor appointed by Hermanus Siyakha. The mentor provides assistance and guidance to the borrower, and will often have been involved in motivating the loan application.
- Regular contact is maintained between the borrower and the mentor, who is responsible for providing regular feedback to management on how well the project is progressing and to what extent the borrower is meeting his/her repayment commitments.
Will HS provide feedback to contributors on the progress of each project?
- Regular feedback on projecst is provided via an updated newsfeed on the Hermanus Siyakha website and through an electronic newsletter to all lenders. At any stage a lender may request an update on the particular project that they have funded.
- Lenders are also encouraged to make contact with the borrower, on the understanding that they may not interfere in the execution of the project, nor give advice to the borrower.
- All communications of this nature should be undertaken through the appointed mentor.