Microfinance loans are small loans given out to individuals who are too poor to qualify for traditional bank loans. Hearts for Hue provides microfinance loans to poor women with the aim of sustainable economic support, income generation, and employment creation.
This women’s empowerment program supports economic development by giving women the opportunity to open businesses or invest in their current business and create a steady future income.
HOW THE PROGRAM WORKS:
Hearts for Hue works with the local authority and the local women’s union to assess the level of poverty and capacity for business development. Interested women are invited to take part in an introductory lesson in microfinance. Following the lesson, women can fill out an application form for the program. Selection criteria is based on the level of poverty, need, and business development capacity.
Once women are chosen for the program, H4H starts training a Community Management Board who oversee the loan program locally. This training covers business and management topics such as financial management, monitoring and evaluation.
Women are then brought in as a group and trained on a variety of business development topics such as credit and saving management. Trainings can be as specific as training women on how to raise pigs properly in order to make a profit once sold, to more broad topics such as successful marketing of a product.
Hearts For Hue believes in the importance of supporting one another, therefore group members are expected to assist each other with payments and business. If one member is unable to pay back their loan fully, the group assists financially. Women are encouraged to share ideas and help each other out with their businesses. This creates a strong network of financially independent women.
Loans are typically used in a variety of ways, such as breeding of livestock, cultivation of various crops, sale of consumer goods, or any other purpose that will improve their livelihoods.
Loan sizes are dependent on the borrowers needs and start out on average at $240USD. Borrowers can reapply for loans for three years. With each year, borrowers are able to apply for larger loans.
1st year: $240
2nd year: $336
3rd year: $480
Loans are repaid monthly with low interest rates ranging from 0.4% to 1% per month. Microfinance loan terms are flexible, ranging from 12 to 24 months.
Hearts For Hue reinvests these funds in other activities that support microfinance clients such as business development skills training and providing education opportunities for children. It also retains a small amount to cover program management expenditures.
Hearts For Hue has carried out its Microfinance Program in Hue City since 2011 and has given out over 500 loans to poor women.