Notes to broadcasters
The figures in this script are quoted in dollars. Please insert appropriate local currency figures when using this script.
SOUND EFFECTS: RURAL SOUNDS (livestock, market, etc.)
I would like to share my story with you. I really didn’t know much about borrowing money when I first started. It wasn’t as easy as I expected.
As I said, I wanted to grow rice. Seed is expensive and that’s what I needed the loan for. I talked to my husband about it. At the beginning he didn’t seem interested, but then he started asking me more details about how much money I could borrow and things like that. Finally he agreed. I calculated that I would need 50 dollars to buy enough seed to plant the field beside my mother’s house. My husband said that I should ask for more than that so that we could buy some clothing and things for the house. I didn’t think there was anything wrong with that so I asked for a loan of 100 dollars.
SOUND EFFECTS: OFFICE SOUNDS (typewriter, other office equipment).
She told me she wanted to start a small business growing and selling rice. She needed the money to buy rice seed. She wanted to plant a lot of rice.
She didn’t know the term of the loan she wanted but I helped her work it out. I asked her how long it would take from the time she bought the seed to the time all her rice was sold at the market. In other words, how long did she think it would take to earn all the profit on her 100 dollar investment. Once she had sold all the rice she had planted she would have enough money to pay back the loan, and keep some for herself.
At that time she could apply for another loan if she wanted to plant more rice. She said that four months would give her enough time to plant, harvest and sell the rice. So I said she would need a four month loan.
She would have to pay back the money after four months. She would also have to pay the cost of borrowing the money by making small payments every month. We call that cost the “interest” on the loan.
SOUND EFFECTS: RURAL SOUNDS
When I received the money my husband said we should use the money to buy some new clothes and maybe some furniture. But now I didn’t agree. I thought we should just go out and buy the rice seed. We argued. Finally I said okay because I didn’t want to argue and I wanted to get the money. I also knew that I had taken out more than I needed for my expenses.
My husband went out and bought some clothes and other things – I’m not sure what. He spent 50 dollars.
Then I went to town and I bought 50 dollars worth of seed. Together my family and I planted the seed. After four months my loan payment was due. I had harvested the rice but I had not sold it yet. It would probably take me another month to sell it. When I tried to gather together the money to repay the loan I didn’t have enough. And I realized that even if I had sold all my rice I still wouldn’t have made enough money to repay the loan. Now we were in a very bad situation. We had less money and were more in debt that before I got the loan. I was crying a lot.
SOUND EFFECTS: OFFICE SOUNDS
The payment she needed to make was based on the 100 dollars.
The second reason she was in trouble was that she misjudged the amount of time it would take her to grow and sell the rice. This time period is known as her business cycle. She did not calculate it correctly. So after four months it was time to pay back the loan. But she hadn’t sold all her rice so she didn’t have enough money to repay the bank.
From the point of view of the bank she was now a bad risk as a borrower. It would be difficult for her to get another loan from our organization.
SOUND EFFECTS: RURAL SOUNDS
Also, I didn’t understand what they call my business cycle. I wasn’t sure how long it would take me to harvest and sell my rice, so I didn’t know when I would have the cash to repay the loan.
For all these reasons I couldn’t pay back the money. Now I am more in debt than before I started. The bank called me a poor credit risk. And I may not be able to get another loan. But I learned from my mistakes. I won’t make them again if I do get a loan again some day.
This script was written by Jennifer Pittet, Managing Editor, Farm Radio Network, Toronto, Canada.