Structured loans are the primary product that the RHLF offers. They are provided to intermediaries to establish, support or develop a housing loan operation addressing the need of individual households. The minimum loan size is R 1 m, unless expressly decided otherwise by the Credit Committee.
Structured loans are structured to match the intermediary’s underlying product profile, and are disbursed according to the following three criteria:
- Draw-downs should be structured so that the RHLF’s exposure is limited (a higher risk profile should be accompanied by a slower draw-down pattern to allow the RHLF to monitor the performance of the intermediary)
- Draw-downs should be matched with the intermediary’s disbursement of qualifying loans and should not allow the intermediary to build up extensive surplus funding
- The size of the facility and the draw-down schedule should be in line with the historical growth pattern of the intermediary and its capacity to manage growth, to avoid potential destabilizing effects. The repayment period should match that of the end user.
A Pilot Loan is a venture-capital investment instrument designed by the RHLF to support retail lenders to explore new markets ((such as informal earners or low-income households in un-served rural areas) and/or new products (like alternative loan products with appropriate collection methodologies). It is expected that out of a successful pilot loan, a structured loan will follow.
To enable an institution to test new ideas, the RHLF would provide loans (up to a maximum amount of R5 million).