Each year, we would allot 9000L for our Catastrophic Loan program. Clients in crisis, whether family, economic, or otherwise, can request a Catastrophic Loan of 1500L or 3000L. What makes these loans unique is their repayment schedule, in which a client receives an 18-month loan, but the initial repayment is delayed 3-months, allowing a client to rebuild without additional financial stress. The interest rate is lower than traditional loans too, 15%, to further aid our clients.
While there are no punitive penalties for failing to repay a Catastrophic Loan, there are incidental. A Catastrophic Loan cannot be received with additional loans outstanding (we would be effectively paying ourselves off. There are some circumstances in which loans can be forgiven, however). Furthermore, no additional loans can be provided while the Catastrophic Loan is outstanding.
Currently we have no program like this. The only precedent currently set is to simply provide grants–but while the intention is good, it is not within the scope of an MFI, and should not be an option available to an MFI that is more than $4000 in the red.