The Strategic Global Capital Pilot Programs

A History of Success Stories

In August 2011 and November 2011 Strategic Global Capital launched its first two pilot loan purchasing programs with two separate Micro Finance Institutions in Ecuador.  The two different Micro Finance Institutions go by the shortened name of CACMU (www.cacmu.com)and CEPESIU.  The pilot programs were a great success and a loan purchasing program is ongoing to this day.

CACMU is a savings and loan cooperative founded in 2001 in Ecuador with the goal of providing financial and non-financial services to under served women and their families.

The savings and loan cooperative is part of a larger group made up of several organizations offering health coverage, technical assistance, and training services for environmental conservation. CACMU provides a package of services throughout the business cycle.

Building Trust with Microfinance  Institutions

Between 2011 and 2014, the founding team also took the opportunity to understand the local culture and build stronger trust with the Micro Finance Institutions  and with the borrowers’ communities.  There were different types of loans, including loans to small businesses, loans to cooperatives to help the community and agriculture loans.  Many of these loans had collateral or guarantors.  The founding team met some of the end borrowers and visited their homes.  For example, the founders met a lady who borrowed money for a sewing machine so she could make purses she would then sell in the Amazon region.  They also met a restaurant owner who borrowed money for a stove.  “We met this lady who was a single mother.  She was doing cleaning work and couldn’t support her children. So she started making front doors for homes, with intricate designs.  We saw the thankfulness on her face.  We were there to help her business.  She touched our hearts.  This is about helping people,” (Co-Founder Dorothy Kuhn).

The individual loan amounts were originally USD $200-USD $500 with maturity of 18-24 months.  As these borrowers gradually gained more success in their small businesses and built up their credibility, they were able to borrow as much as USD $5,000 to USD $10,000 with maturity up to six years.

The two Micro Finance Institutions enjoyed using proceeds from the loan sale without restrictions. As most of the Micro Finance Institutions were funded by non-profit organizations with stringent terms on the funding’s usage, the sale of existing loans to Strategic Global Capital allowed MFIs to issue more loans to local borrowers or use the extra liquidity for working capital needs.  “All of a sudden, Micro Finance Institutions have unrestricted cash. So they can use it for working capital and expand their loan portfolios. Previously these Micro Finance Institutions’ cash was restricted by their funding sources with stringent reporting requirements,” (Co-Founder Bryan Kuhn).   “The Institutions  are delighted that we are a family run business.  The South American culture is very much about family and family connection. We managed to gain their trust.  I thought being a small family business as opposed to a large corporate would be a disadvantage.  But it turned out to be an asset,” (Co-Founder Bryan Kuhn).

Strategic Global Capital conducted a much more in-depth due diligence on the Micro Finance Institutions over time, visiting the Micro Finance Institutions  to ensure that they had the appropriate computer system, accounting system and credit evaluation system in place to ensure that they had the capability to handle any significant increase in the number of loans sold to Strategic Global Capital. The team concluded that both Micro Finance Institutions were capable to handle increased investment in these loan programs.  The Institutions themselves, however, were wary of growing too fast. “The Institutions are conscientious about the quality of loans to Strategic Global Capital.  They want to manage the scale of growth and are concerned about the education aspect of borrowers.  They want to focus on growing in a sustainable way in that region,” (Co-Founder Bryan Kuhn).  In addition, the founders had interests from several other Micro Finance Institutions  who had wished to launch loan purchasing pilot programs.

Founding members wanted to expand business beyond their pilot programs.  As such, the founding team needed to turn its attention to the next phase of the business, raising outside capital to grow the business to the next level of success.

Talk to one of our finance specialists today to learn about investment opportunities. Our SGC Pilot Program increases loan revenue to partner MFIs while expanding capital available for lending. Discover how a partnership with our company can help you today. Get in touch!