Overview

The income distribution process involves the following steps:

• Calculating the total interest from the loan repayment.
• Allocating portions of the interest to various accounts (e.g., commission, operating expenses, reserves).
• Distributing the remaining amount to shareholders as equity and dividends.
• Updating shareholder accounts and creating records for equity contributions and dividends.

Step-by-Step Process

1. Calculate Total Interest

Once a loan is completed, the total interest is calculated from the loan as total paid less the loan amount disbursed:

Total Interest = Total Paid - Loan Amount

2. Allocate Interest Components

The total interest is divided into the following components:

• Commission: 10% of the total interest is credited as commission to the agent or shareholder that referred the customer. This is an automated process and every shareholder is eligible to refer customers to qualify for this commission. Shareholders can use this commission as equity to increase their share. Clients placed in a shareholder's low-interest classification groups do not attract commission — the reduced rate is their benefit.
• Operating Expense: 20% of the total interest is kept to be used for operational expenses in the Operating Account
• Loan Funding Reserve: 30% of the total interest is kept in the Operating Account to be used for loan funding.
• Distribution: Remaining 40% (or 50% if loan has no agent for commission) after subtracting the above components.

Formula:

Distribution = Total Interest - Commission(optional) - Operating Expense - Loan Funding Reserve

3. Split Distribution

The distribution is split into two parts:

• Equity Distribution: 75% of the distribution.
• Dividend Distribution: 25% of the distribution.

Formulas:

Distribution Equity = 0.75 x Distribution
Distribution Dividend = 0.25 x Distribution

4. Create Internal Account Movement

An internal account movement is created to transfer the equity distribution amount from the Operating Account to an Holding Account. Once, the transfer is initiated, the Net Asset Value of the fund is increased by the total equity moved which subsequently increases the shareholder's networth based on their new shares.

5. Allocate Accruals

The loan funding reserve and equity distribution (60% of the interest generated) which are still considered part of the fund's asset form the credit basis for accruals to be drawn from. This accrual credits is further divided into various shareholder accounts:

• Housing Account: 15%
• Rental Account: 5%
• School Fee Account: 10%
• Medical Account: 7.5%
• Savings Account: 10%
• Emergency Account: 2.5%
• Investment Account: 10%
• SME Account: 10%
• Vehicle Account: 2.5%
• Holiday Account: 2.5%
• Insurance Account: 2.5%
• Funeral Account: 2.5%
• Gym Account: 2.5%
• Christmas Account: 2.5%
• Birthday Account: 2.5%
• Spouse Account: 2.5%
• Children Account: 2.5%
• Church Account: 2.5%
• Family Account: 2.5%
• Other Account: 2.5%

Any accumulations in these accounts represent the amount that could be borrowed on an Interest Free basis whenever there is a need for respective account purpose.

The accrual distribution component and respective percentage breakup is done such that the fund has enough capital to fund all funding requests from all shareholder at any instance.

For Example:

In December, all shareholders are expected to apply for loans at maximum limits in their Christmas, Holiday, Savings, Family and Other Accrual Accounts and then without even paying them back yet, all of them are expected to apply for maximum in their School Fee and Children Account when its the beginning of school year, and inbetween christmas and before school, we expect some to max out their Medical, Insurance and Emergency accounts. Under such circumstances, the Fund is expected to have enough cash to cover for all the funding requests.

When a paticular accrual loan is repaid, 50% of payment in credit is credited back to the respective account in order to main a certain amount of eligibility for shareholder.

6. Calculate Net Aasset Value(NAV) Per Share

The Net Asset Value (NAV) per share is calculated as:

NAV per Share = Net Asset Value / Total Shares

This is basically the Share Price of shares in the fund which is displayed on every share holders dashboard.

7. Distribute to Shareholders

For each active shareholder:

• Calculate the shareholder's share percentage: Shareholder Share Percentage = Shareholder's shares / Total Shares x 100
• Calculate the equity and dividend amounts for each shareholder:
• Equity from Distribution = Share percentage x Distribution Equity
• Dividend from Distribution = Share percentage x Distribution Divendend
• Update the shareholder's shares:
New Shares = Equity from Distribution / NAV per Share
• Create records for equity contributions and dividends.
• Update all accruals accounts for the shareholder. For example, Housing Account Accrual will be updated by the following formula:
Housing Account = Housing Account Allocation x Shareholder Percentage
• The Dividend accumulation is shown on the shareholder's dashboard and are classified as a Liability in the System.
• The dividends are withdrawable once every Fortnight at the discretion of the shareholder. Capital Gains Tax will apply at this point. Shareholder can automatically credit this back into the system as equity to buy back shares to increase their stake.

8. Recalculate NAV

Net Asset Value of Fund will be recalculated automatically considering the increase in total shares which can increase the share price consequently.

Repeat

This cycle repeats for every loan that is completed, gradually increasing the shares and networth of our shareholders