Department of Health and Human Services: Refugee Microenterprise Development ProgramDeadline: June 7, 2021
The overall goal of the Refugee Microenterprise Development Program (MED) Program is to promote refugee economic self-sufficiency by providing assistance with development, expansion, or maintenance of refugee-owned micro-businesses. Under the MED Program, the following objectives must be carried out: 1) assisting refugees to establish microenterprise businesses through the provision of MED loans, T/TA, 2) assisting refugees in developing credit history and/or in repairing their credit scores, and 3) assisting clients in moving up the capital access ladder and transitioning into the mainstream banking sector. The program is open to any eligible individual who is interested in starting or strengthening a business. It is important to note that the program is open to individuals who only need T/TA and also those seeking loans. See solicitation for definitions of “refugee.”
Allowable activities include:
- Business Development Training and Technical Assistance (T/TA)—MED Programs must provide T/TA services to the refugee clients, as needed. Training is defined as a curriculum delivered to potential entrepreneurs or business owners in a classroom or group setting. TA is defined as individualized or one-on-one consulting, counseling, mentoring or facilitation related to business development, or personal development of the entrepreneur. The purposes of the business development T/TA is to assist the refugee clients to succeed in establishing and managing a profitable business. T/TA services should be based on the need of the client, provided at the convenience of the client, and delivered in a culturally and linguistically appropriate manner. It is preferable that the training be short in duration, not to exceed 4-5 weeks; include all aspects of small business knowledge and skills required to operate a profitable and successful business and comply with all applicable laws and regulations. See solicitation for more details on T/TA requirements.
- Credit Builder Loans (CBLs)—The CBL is a small dollar loan given to an eligible refugee client who meets the following conditions: 1) Meets the definition of eligibility for services, but first needs to strengthen his/her loan application before s/he is ready to take on a larger business loan; 2) Has demonstrated a commitment to enroll in the regular MED Program after completion of the CBL through a formal enrollment process. The CBL must be used for a business purpose that requires a small amount of capital and that can be repaid in full (including interest) within 12 months or less. The business purpose should be directly linked to the microenterprise that the refugee clients will work towards. See solicitation for more details on CBL requirements. MED Programs that offer CBLs must provide basic financial education with special emphasis on budgeting and the importance of credit and how to build a good credit score. The refugee client must successfully complete the training prior to receiving a loan.
- MED Loans—MED loans consist of small amounts of credit that are extended to low-income entrepreneurs for the start-up of a small business or for the expansion or stabilization or purchase of an existing small business. Funds may be disbursed through individual loans from an established Revolving Loan Fund (RLF). The amount of the grant allocated for revolving loans (as opposed to operating funds) is not specified and the amount for each project will be reviewed on a case-by-case basis to determine reasonableness. MED Programs must establish policies and procedures to screen potential refugee clients and are expected to make a good faith effort to collect loans within the project period; however because of the risks involved, some defaults are likely to occur. The amount of the uncollectable debts may not be charged to the grant. Related collection and legal costs arising from such debts after they have been determined to be uncollectable are also unallowable. Examples of specific conditions of the MED loans include (see solicitation for additional details): 1) Maximum loan amount to be given to a refugee client is $15,000; 2) MED Programs should attempt to make at least 15 loans per year (of the 15 loans, 5 loans may be repeat loans); 3) Repayment period must be determined on the ability of the borrower to pay from the income derived from the business. However, all loans must be repaid within the project period. When the principal loan amount is repaid with interest, it is program income. The program income is added back to the MED Program fund to make MED loans to other refugees during the project period.
MED Programs may use funds from local, state, and federal grant programs, and from commercial lending institutions and philanthropic donors to leverage the limited amount of grant funds available for this purpose. Thus, MED Programs may elect to establish cooperative relationships and memorandums of understanding with one or more of the community’s financial institutions in order in order to help bridge the financing gap for clients searching for loans greater than $15,000, and to help graduate clients into the mainstream banking sector.
Program requirements—MED Programs will open and maintain case files for each client that are kept confidential. The case file will, at a minimum, contain a completed enrollment form, copies of documents that show eligibility for service under this project; application of the client with the business net income at the time of enrollment; a brief business plan with a 1 year cash flow statement; a promissory note or a loan agreement; and a log sheet showing all T/TA provided. MED Programs must establish and maintain written lending policies and procedures, and procedures for collecting and servicing loan repayments. See solicitation for details.
Financial requirements—MED Programs may not charge refugee clients interest rates that exceed four percentage points above the U.S. Prime Rate as published in the Wall Street Journal at the time of loan approval. See solicitation for details.
Coordination with Refugee Resettlement Community—Programs are required to include regular coordination with resettlement agencies, State Refugee Coordinators or Replacement Designees, and other relevant community services providers to extend the effort of the outreach, awareness, and coordination with the refugee resettlement community. Attendance at quarterly consultations with resettlement agencies, regular meetings with State Refugee Coordinators, and participation in other relevant forums are examples of activities with strategic partnerships to facilitate resource mapping.
Amount: And estimated $2,500,000 is available to make 12 awards that range from $150,000-$250,000 per budget period, for a project period of up to 60 months.
Eligibility: Public and private nonprofit agencies, including state governments, county governments, city or township governments, special district governments, independent school districts, institutions of higher education, tribal governments, tribal organizations, public housing authorities/Indian housing authorities, Nonprofits with or without 501(c)(3) status. See solicitation for more stipulations on eligibility.