Zero-Kap; PO Box 274; 1400 AG Bussum; The Netherlands Phone: +31-35-6936232; fax. +31-35-6922039; e-mail info@zero-kap.

nl

Dear Applicant: What we need to know from you in order to decide whether we will supply you with a project proposal form:
Zero-Kap is a foundation established in The Netherlands, offering interest free or low interest credits to groups with ideas that would make a profit, that do not have easy access to the financial institutions and consequently cannot obtain sufficient credit required to make a start. Loosely defined, the groups or communities we are targeting at are the relatively less privileged in selected developing countries (this may be minorities, women, refugees, tribal communities etcetera). As credit management, apart from financial competence, also does require specific knowledge about the sort of activities being financed and the local/regional situation and at least some appreciation of the regional culture, Zero-Kap does limit its activities to certain countries/ regions within countries, trades and organizations. The present country list does include: India (Tamil Nadu), Indonesia, Banladesh (pilot), Burkina Fasso, Burundi, RD Congo (pilot), Uganda (pilot), Peru, Bolivia, Surinam and South Africa. We feel that, within those countries, we have a network of relations that is well enough developed to allow us to closely monitor projects. Pilot does mean that we are presently testing possibilities with one project at a time in the particular country. Outside these countries we do consider applications only, either if a third party is putting up the funding and allows us to manage the fund and/or if the applicant does bring is a guarantee through an internationally operating bank or financial institution. Other applicants are urgently requested not to apply, as this only burdens our secretariat with the requirement to answer negatively, referring to the above.. The trades within countries where Zero-Kap sees possibilities to offer support include: agriculture (and fisheries), transformation of and trade with agricultural produce, construction of homes and buildings in support of primary production and micro-finance. Groups or companies we are cooperating with should have a juridical base (registered with authorities) and decisions should be taken through a majority of members votes (hence we work with cooperatives and societies), or at the least the participants (or employees) should clearly have an influence of decision making process. Group members should have access to all management functions through election or following due consultation of membership. Groups should not consist of one (extended) family. General procedures followed by our organization are outlined on our website: www.zero-kap.nl . The most important demands are presented below as a series of queries. Try to answer those as comprehensive and clear as is possible. Please realize that Zero-Kap is giving credits at low or zero percent interest, but does not give grants. Hence the activity being supported by Zero-Kap should generate a positive and sustainable cash flow, taking into account reasonable incomes for associates and employees. The probability that the credit will be paid back from increased cash flow should be convincingly demonstrated in a business plan A new loan may be considered only after an earlier loan has been fully paid back. Though the request for a credit should be made by the group itself, this group may be represented by an organization in The Netherlands or any other country, including the country where the group is living. However, the relationship between the representing organization and the target group should be fully clarified to the satisfaction of the Zero-Kap board. Answer the following questions, taking into account the general requirements outlined above: 1. 2. Specify the juridical status of the organization. Specify the assets and present financial reports from the group covering the past 2 or 3 years.

Form: B 06/ 20080418 /JWH

Page 1 of 3

Zero-Kap; PO Box 274; 1400 AG Bussum; The Netherlands Phone: +31-35-6936232; fax. +31-35-6922039; e-mail info@zero-kap.nl

3. 4. 5. 6. 7.

8.

9.

10.

11. 12.

13.

14. 15.

16.

17. 18.

19.

20.

21.

22.

Give a brief outline of history of the group / organization and list past projects and/or achievements. Indicate how group/organizational decisions are being made. Give evidence that group/organizational decisions are based on the principle of one man/woman and one vote. Who is representing the organization/group and what is his or her mandate? Did members of the group/organization have a vote in (s)election of its representatives, directors, board members? Give names and addresses of functionaries representing the organization/group. The target groups of those receiving our credits are the relative poor people in specific developing countries, who work together on a project such as housing, income generation through agriculture, fisheries, transformation and trade of produce from agriculture or fisheries. Does the group or organization have access to financial support by banks or financial institutions and if not, specify the restraints being met. With what banks do you cooperate? At a later stage we will request a statement by your principal bank concerning your status and credibility. If you received credits from other organizations in the past, present proof that loans have been paid back timely. If you did receive grants from other organizations, give evidence that the donor has been satisfied with the use of the grant and reporting on use of the grant. Specify what the loan is being used for, who is benefiting and show that the activity will generate a positive cash flow after taking into account reasonable incomes for the group members. At this point you may present a summary of your business plan (later we may ask a more detailed plan). Specify the major risks of the plan and how you cope with those. The eventual loan is in Euros (), you would pay back the loan in Euros and hence your request should be in Euro. If your business plan is in local currency, add the conversion factor to the Euro and summarize the key figures in Euro amounts. Zero-Kap does not have a specific minimum or maximum defined for the credit. However, we concentrate on small scale projects with a financial requirement well below that of the internationally known NGOs. Credits for income generating programmes should be paid back in full within 5 years in equal installments separated by 6 months, unless we agree on a different term. Credits for private home construction projects should be paid back in 9 to 10 years at most. You should in your proposal indicate how you plan to pay back the loan (cash flow projection). You should convince us that paying back the loan in Euros is possible through local banks or otherwise and is not impaired by any legal restraints. All costs of money transfers are carried by the beneficiary of the loan. Though we do not cover interest, realize that any currency risks are to the recipient of the loan. th Repayment of a loan will start after six months and following installments are due each 6 month. We may consider a grace period in payment of the first installment up to one year after transfer of funding into the project. However, such delay should be negotiated in advance and well argumented. The loan is for a specific goal or project and not meant to strengthen the financial position of any organization. The receiving organization may subdivide the loan into smaller parts to be lent to individuals or groups affiliated to the organization (micro-credits). The receiving organization may charge interest and expenses to its clients, though we will have to agree on those details. We usually do require a firm guarantee, preferentially through a local or international bank or other financial organization that would allow us to recover the loan in case of failure at the side of the beneficiary. We obviously require full disclosure of the credibility of the entity giving the guarantee. Usually the loan will be awarded under the condition that 80 to 90% of the loan amount will be transferred immediately following the signing of the contract and the remainder after a predefined stage of development of the project has passed. We present a local monitor to supervise the project. The monitor should be socially and economically independent from the recipient of the loan. However, if the monitor does require a fee or compensation for travel or other costs, those costs will be negotiated between by the recipient of the loan and the monitor. If the proposed plan is part of a larger investment: What is the total investment (including this and other requested loans) and what are the sources of the investment?

Form: B 06/ 20080418 /JWH

Page 2 of 3

Zero-Kap; PO Box 274; 1400 AG Bussum; The Netherlands Phone: +31-35-6936232; fax. +31-35-6922039; e-mail info@zero-kap.nl

23.

24. 25.

Specify the contributions made by the group or its members. Please consider that personal contributions by members need not be limited to financial inputs. Also inputs in materials and labor may be considered as long as the value of such input may be monitored. Do you know of other Zero-Kap projects in your country/ region, or similar projects financed by foreign NGOs? How did you hear about Zero-Kap?

We do communicate through e-mail. Only original documents with legal status will be sent by postal mail or courier upon the request of the director of Zero-Kap. Our e-address is: info@zero-kap.nl. While we prefer communication in English, as this does allow all members of the board to participate in future decision making, we also accept applications in French, Spanish and Portuguese. However, depending on the advisor, answers from our side may be in English. If you feel that you could positively reply to most of above queries and after answering those in a generic manner we will do a first evaluation. This evaluation does take account of the quality of your answers, the balance in our portfolio of loans, the amount of the credit required by you, the liquidity position of our organization and the number of applications being reviewed. If we feel that your request might be successful, it will be placed on a short list and presented to the board at its next meeting (The board does meet approximately six times a year at irregular intervals). We always try to indicate within one month after receiving your application whether it has been or will be placed on the short list. If accepted by the board for further elaboration, one of our advisors will be assigned to your project and you will receive a formal application form. If your proposal is not acceptable I will inform you at once and give you the reasons. The advisor will guide you through the application process, until the form contains all information he feels is required and he is able to summarize his findings. Than he may propose the project to the board, or advises to deny the proposal. In certain cases and within this phase I will be the acting advisor. In all cases the board does decide. Decisions are not only based on the merits of the proposal, but also take account of the social and political situation in your area, the balanced spreading of our portfolio over countries where we are active, the balanced spreading of our portfolio over activities (agriculture, micro-credits, industry, home building), the availability of funding and the assessment by our local monitor. As soon as possible, after the board decided, I will inform you about the outcome. Once the loan is granted, I will inform you at once and ask you to prepare and send all appropriate formal documentation that is legally required (by Dutch Law), or that we deem necessary prior to activation of the loan. At the same time I will prepare the concept of a contract based on the formal application and offer that to you for comment. Once I feel that all documentation is complete and the contract signed by you (and the guarantors and monitor) I will inform the treasurer that the amount of the loan may be transferred into your account.

Sincerely Yours,

Jan W. Henfling PhD Zero-Kap Project Director Note: Zero-Kap wishes to set an example in fair treatment of all our stakeholders. In case you feel not treated well, you should forward any complaint to our chairman at: chairman@zero-kap.nl. Our chairman also chairs the complaints commission.

Form: B 06/ 20080418 /JWH

Page 3 of 3