SKS provides loans to the poor through a community-owned, grameen (village) banking program that utilizes the peer-lending model developed by the Grameen Bank of Bangladesh. SKS' methodology involves several phases-a village survey, projection meeting, the formation of groups and sangams (collectives), and administration of the savings and loan program.

During the formation phase, it is crucial that SKS staff keep in mind that only the poor should be targeted for membership in SKS. This is important not only because the mission of SKS is to empower the poorest, but also because only the poor will accept the strict credit discipline that is needed for near perfect repayment rates. A low default rate is essential for SKS to become financially sustainable, thus enabling the organization to access large amounts of credit to lend to its members.