Microfinance Loan Program
Project Goal: $33,000
Currently Raised: $35,545Still Needed: $-2,545
OVERVIEW
Children of the Nations (COTN) is partnering with Esperanza International to offer small business loans to impoverished individuals. These types of loans are commonly referred to as microfinance loans. COTN has identified microfinance as a valuable tool in helping to break the poverty cycle, and Esperanza has deep expertise in the microfinance area. Both organizations desire to alleviate poverty in the Dominican Republic and both are faith-based nonprofits.
Esperanza International has many years of experience in the field of microfinance, and specifically in a Dominican Republic (DR) context. The lending model, called “Banks of Hope,” was developed by Esperanza International, who currently operates in several regions of the DR and in the northern part of Haiti. Esperanza’s role is to provide the skills, knowledge, infrastructure, and software needed to successfully deliver a microfinance loan program.
COTN’s INVOLVEMENT:
COTN will be a partner in the 1-year pilot program, providing Esperanza with clients for the loans. (Priority will be given to “alumni” of COTN schools and our skills center, followed by caregivers of children enrolled in one of our Village Partnership Programs, and then to the general public.) COTN is also providing the physical location for the training and weekly meetings of the Banks of Hope members. A COTN staff person will shadow an Esperanza loan officer to learn how to run this program sustainably, and act as liaison between Esperanza and the people in the communities served. COTN will also provide the financial backing for the entire pilot.
PROJECT OVERVIEW
There will be two parallel Banks of Hope programs running simultaneously. One system will provide loans of up to $300, for a period of 6 months with weekly repayments. The second system is for loans of more than $300, for a one-year period with monthly repayments. The lower dollar amount loans are primarily for first-time loans or higher-risk businesses. Both programs will be run using a group lending system as this increases repayment rates, which typically run at 98% or higher. A total of 40 people will receive loans and all must go through a training program before becoming eligible for a loan.