MFI INVESTMENT DUE DILIGENCE CRITERIA AND APPROVAL PROCESS

Prior to an SBF investment, each potential investee will be analyzed through SBF’s rigorous due diligence process to ensure the MFI aligns with SBF’s qualitative and quantitative criteria. While each potential investee will be analyzed as a stand-alone entity without regard to parent companies or affiliations, some instances may occur where affiliations can augment the effectiveness of SBF’s contributions and, therefore, might be considered in the analysis. SBF might assign a weight to each criterion to indicate its level of importance.

Investment criteria

SBF’s investment criteria may be modified over time as appropriate in order to reflect best in class practices and remain relevant. Areas of review might include corporate governance, financial sustainability, poverty focus, client-training Other areas to include but not limited to area:

  • Having a defined strategy to meet SBF’s criteria though committed Board members, management and employees who work towards meeting clients’ needs and preferences.
    • The strategy should define social goals, targets and indicators to measure progress
    • MFI must analyze and report social performance internally and externally
    • The strategy must contain accurate client data specific to its social goals
  • having a sound policy and well-documented process for loan approvals and decision-making using appropriate information and criteria.
  • having a policy on sustainable target growth rates that considers the provider’s growth capacity, institutional sustainability, and social goals.
  • having women employees and women in leadership positions. The MFI must provide business and leadership training to its employees which should include training in social and financial responsibilities of the organization.

Based on our proprietary asset criteria Seven Bar Foundation will perform annual impact assessment on the MFI, either using SBF's review process alone or, in the interest of using resources wisely and effectively and where appropriate, using the assessment conducted by other organizations or collaborating with other organizations.

Investment approval process

SBF Board, or other review committee which SBF might form, will review all proposed investments to ensure they align with SBF’s criteria. The methodology may change from time to time as appropriate and may include the following:

  • Prepare investment package for Investment Committee review by gathering relevant due diligence information through on-site meetings, public information, historic data and projections. Present investment package to the Board and receive feedback – if the Board approves the loan then proceed to closing.
  • If the Board does not approve the proposal then address and review any outstanding issues and present the proposal for review again.
  • If the proposal is rejected a second time then the loans will not be approved.