Otherwise SmallFunds

Otherwise Small Funds provides short term personal loans. Small Funds to provide small, low cost loans exclusively for Otherwise Living members who may otherwise be unable to borrow. Eligibility for these is set out in our policy document.

As a non-profit activity we do not charge interest on loans. However, we do have to charge small management fees, to cover admin costs, the cost of our lending licence and comply with data protection law.

We operate as a mutual aid fund supported by London Rebuilding Society (LRS).

Loan amounts & repayment periods


£50

4 Weeks/1 Month

£50-100

12 Weeks/3 Months

£100-300

25 Weeks/6 Months

How it works


Eligibility of Borrowers

Borrowers must have been members of The Otherwise Club for at least 1 year with no fees outstanding.

If either of the above criteria isn’t met another club member may stand as proxy/guarantor. This member cannot be a member of the Loan Fund Committee.

Purpose of and Types of Loan

• Personal use
• Development of micro enterprise

Amount of Loan / Loan Repayments


Loan Methodology

Loans will be stepped. Borrowers must start with minimum level of loan and repay before accessing the next level.

Frequency of Payment

The frequency of repayment is flexible and will be discussed with the borrower. A clause clearly specifying the frequency of repayment will be included in the loan agreement. Generally the fee will be 10% of the total loan + £2 for loans over 3 months, + £3 for loans over 3-6months, +£5 for loans over 6-12 months. The fee for the initial loan is £5 ‘membership’ fee + 10% of the £50 borrowed.

Collateral

None required.

Process of Loan Application

The borrower must:
1. Provide: Contact details, Proof of identity, Proof of address, Proof of residency (if applicable)
2. Complete the application form
3. Attend an interview with the loan officer to discus method and frequency of repayments

For loans over £100:
Applicants may be asked to provide a reference/guarantor or budget/business plan.

Assessment of Loan Decision

When considering a loan application the loan officer/committee will consider:
• length of membership of Otherwise Living
• payment of annual membership fees
• contact details supplied
• completed application form
• supporting documents
• legal status/proof of residency

For loans in excess £100, they may also choose to consider:
• referee/guarantor
• budget/business plan

Procedure for Loan Decision

If the borrower meets the membership criteria and completes the application form, then access to a £50 loan and then a £100 loan is assured. For larger amounts it will be necessary to consider the ability to repay. This will be discussed in a meeting between the borrower and the loan officer, as well as by the Loan Committee. A decision will be reached within 7 days. If the loan is approved, a letter/contract/repayment schedule will be issued and the money will be released within 7 days. If the loan is declined, the reasons for rejection will be available in writing, if required.

Loan Disbursement

The loan can be received in cash, by cheque, or as a bank transfer. In the case of micro enterprise loans, borrowers must submit evidence of use the loan within a mutually agreed period.

APR

Even though OSF doesn't charge interest, we are legally obliged to give our charges as APRs. The table below shows the types of loan on offer and the fixed fee that you pay. APRs are also shown

Payment Procedures

Collection of repayments may be by any of the following means:
• Cash at club
• Cheques at club
• Post dated cheques received at any time from completion of contract
• Cheques by post
• Standing order

All repayments will be entered into MAF records. All payments will be monitored by the loan officer and loan committee.
There is no penalty for advance payment or early repayment of loan. All payments must be made on or before their due date. Once the due date is passed the loan is in default and will be dealt with through the default policy.

Monitoring Loans

Loans will be monitored by the loan officer after each payment and a monthly report will be prepared for the loan committee. Loan monitoring is the responsibility of the loan committee.

Further Information

Missed payments / issues
Default Policy

If a payment is missed The borrower will be contacted by a member of the loan committee,
initially in person or by phone. If the matter remains unresolved the loan officer will write to the borrower within 7 days.

If the borrower resolves the missed payment, no default will be deemed to have occurred.

If the borrower contacts the loan officer because they are having problems repaying the loan and a meeting is arranged the loan will not go into default unless the situation is not resolved.

The borrower and the loan officer will negotiate a plan to deal with the loan problem which may involve rescheduling the loan. Both the loan officer and the borrower must agree and sign the revised repayment schedule.

If the borrower and the loan officer cannot agree a repayment plan, they may ask for an independent external judgement from a recognised debt counselling agency e.g. CAB. In this case both borrower and Finance Otherwise must agree the outcome.

If the borrower fails to contact the loan officer to discuss the situation and misses a second payment, the loan officer will write to the borrower to warn that action will be taken through the county court.

If there is no resolution or payment a letter will be sent after a further 14 days.

If there is no resolution or payment a letter will be sent after a further 7 days.

If there is no resolution or payment after a further 7 days Finance Otherwise will pursue action through the County Court.

If it becomes clear that the borrower will not be able to repay the loan, the loan officer can recommend to the Loan Committee that the loan be written off.

Written warnings will incur additional fees.
Loan Officer & Committee
Loan Officer Selection and Responsibilities

The Loan Officer (LO) will be responsible for:
• meeting and supporting prospective borrowers
• communicating eligibility criteria to prospective borrowers
• helping borrowers complete required paperwork
• sign posting clients for more supporting as necessary
• monitoring loans payments.
• checking all repayments received
• following up on de-faults and reporting to loan committee if necessary
• evaluating and monitoring any areas deemed necessary by the loan committee.

The Loan Officer must have:
• financial literacy skills
• administrative and record keeping skills
• interpersonal and communication skills
• a commitment to the goals and ethos of FO
• an understanding of loan finance
• received training from LRS or equivalent

Loan Committee

Function & Status
The loan committee will function to make decisions on loans in excess of £100 made by the MAF. The committee will abide by the policy and will be responsible to the directors of Otherwise SmallFunds™ (Reg: Finance Otherwise Ltd.) and the trustees of the Otherwise Club. All members will hold information in confidence.

Selection and Composition
The committee shall be appointed at the AGM of the Otherwise Club and consist of 5 members: • Trustee • Finance officer • Secretary • Two volunteers. One member must have completed LRS training or equivalent

Meeting & Reporting Procedures
The loan committee will meet at least monthly. Meetings may be in person or by skype/phone etc. Meetings will be quorate if 3 or more members are present. The chair of the committee will report to the directors at least annually. Minutes will be posted in club with names redacted.
Company Registration
Otherwise Small Funds It is a trading style of Finance Otherwise Ltd., a company limited by guarantee, registered in England and Wales, company number 08152023. Consumer Credit Licence no. 652333. Registered offices: 48 Waterloo Road, Leighton Buzzard, LU7 2NS


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