father and son in Ecuador

Recovery Loans

Recovery Loans

The three year $55 million Recovering Lending for Resilience program focuses on supporting the ongoing economic recovery of rural farmers and small businesses, urban microbusinesses, and savings groups. 

217,674

loans provided to support the recovery of livelihoods

$119M

Value of loans provided to support the recovery of livelihoods

171,466

of recovery loans clients were women

601,311

children impacted by recovery lending
client in front of store

Recovery Lending for Resilience Program

The COVID-19 pandemic continues to cause massive economic disruption around the world, especially harming the extreme poor.

Throughout COVID-19, most VisionFund clients have experienced a loss of income, as lockdowns and public health initiatives forced many sectors to close. This can lead to impaired livelihoods, and damage prospects of accessing further financing, as a result of the inability to repay outstanding loans. VisionFund is changing families’ ability to recover, and even thrive, through innovative recovery lending programs. 

Countries that were opening up have started locking down again as new strains break out. The uncertainty is continuing to stretch small farms and businesses that face ongoing disruption to markets for their products and services, reduced buying power by their customers, and havoc for business’ caused by illness and restrictions on movement.

The three year $55 million Recovering Lending for Resilience program focuses on supporting the ongoing economic recovery of rural farmers and small businesses, urban microbusinesses, and savings groups. We are working towards recapitalising clients and groups who have depleted their savings and help them reignite farming and business activities to recover their livelihoods.

loan officer and grocery client

Rescheduling loans

When their businesses are closed and their incomes restricted, VisionFund's clients are offered a new repayment schedule.

We've seen our clients become overwhelmed by the responsibility of providing for their families when COVID-19 restrictions have stopped them from earning their usual wage. Our microfinance institutions (MFIs) exist to support our clients through all seasons, and adding to their burdens goes against our Christian principles. Loan officers reach out to clients when businesses enter difficult periods, and together with the client, negotiate a longer and more flexible repayment schedule for their outstanding loans.

It might seem counter-intuitive, but VisionFund consistently sees higher repayment rates when clients have the space to prioritise their families’ well-being, without the added stress of meeting payment deadlines. VisionFund also stays operational and fiscally healthy, by retaining clients for the long term.

Women selling soap

Emergency loans

Sometimes, the best time for an injection of capital is right in the middle of the crisis.

VisionFund's emergency loans have helped clients stay solvent, even when their businesses have restricted operations because of COVID-19. If clients have existing loans outstanding, VisionFund has been providing second, smaller loans with a shorter repayment term where needed, to cover family costs while businesses are out of action. 

Emergency loans ensure our clients don't fall into unserviceable debt or further into poverty, because of the pandemic. As lock and lift patterns emerge in economies around the world, emergency loans help keep food on the table and children in school, while our clients prepare to reopen when allowed. 

Uganda client receiving money from a customer

Refinancing Loans

Some MFIs are helping clients with existing loans by refinancing the loan to include recovery lending.

Clients with an existing loan, but who need additional capital to begin their recovery process, might be eligible for a refinanced loan. If the client has a USD $1,000 loan with VisionFund, we can restructure the loan to include a recovery loan – USD $500, for example - and make the loan an even USD $1,500. This process simplifies repayments for the client and reduces pressure on the household; the client just makes one monthly repayment, and is free to put their energy into restarting their business.

loan officer with client

Walking with our clients

Our lessons learnt from recovery lending from previous disasters, such as Typhoon Haiyan and El Nino, are informing our ongoing response to the COVID-19 pandemic. 

Our microfinance institutions have an intimate knowledge of the economic life of the communities they serve and through their presence in communities are able to make a finessed approach to recovery, looking at past performance not just current loan eligibility criteria. 

As VisionFund walked with clients during the troubling and disrupting COVID-19 pandemic, it became evident that clients' livelihoods had been severely impacted. VisionFund has substantial measures in place to enable clients to manage their loans, however, Government restrictions and limits on mobility are affecting the clients' ability to operate their businesses.

Potential customers also have less income and have stopped purchasing goods. VisionFund anticipates that by the time the pandemic has passed, most of our clients will need a new and possibly additional injection of capital to re-start their businesses. We are assisting clients through recovery lending and through increasing lending to World Vision and other NGO Savings Groups.