Small Business Loan FAQ

How are loans managed?

Our loan fund is managed in Honduras by Armando Lorio, our Director of Operations. Armando meets with applicants, reviews their business plans, evaluates eligibility, and guides borrowers through the loan process.

He also provides ongoing mentorship and support, helping borrowers make wise business decisions and stay on track with repayment. Because Armando works directly with each borrower, we are able to keep the loan process personal, efficient, and focused on long-term success.

How can the loans be used?

Loans may only be used for business purposes. They cannot be used for medical expenses, home repairs, personal purchases, or other non-business needs.

What types of businesses qualify for loans?

We support a wide range of viable small businesses. Borrowers have used loans to grow businesses in fishing, retail, motorcycle repair, construction, sewing, food service, and more.

The most important requirement is that the business has a clear plan, a realistic budget, and the potential to increase household income.

Who qualifies for loans?

We do not discriminate on the basis of race, color, national origin, sex, gender identity, sexual orientation, disability, age, or religion.

Applicants must submit a viable business plan, a detailed budget showing how the funds will be used, and an estimate of the expected return on investment.

Most applications are accepted. If someone has a strong work ethic but does not yet have a complete business plan, Armando works with them to create one.

What is the application process?

Armando carefully reviews each application and meets with applicants to better understand their business, goals, and needs.

Once an applicant is approved, loans are distributed as funds become available through donations and loan repayments. As borrowers repay their loans, the money is lent out again to help more entrepreneurs.

What is considered a “small” loan?

Loans start at $200 and are capped at $1,250.

Smaller first loans help borrowers establish creditworthiness. When a borrower successfully repays an initial loan, they may qualify for a larger loan in the future.

Can you share examples of successful borrowers?

Yes. Every loan we have distributed has helped increase the borrower’s household income. Many borrowers were previously living in extreme poverty, on less than $2.10 per day, and are now running successful small businesses.

This additional income helps families eat more consistently, keep children in school, and be better prepared for emergencies.

For example, Emilia and Georgina each used a loan to purchase a sewing machine after completing a sewing class. Both now operate successful sewing businesses.

Wilmer used his loan to purchase tools after completing a motorcycle repair training program. He now runs a motorcycle repair business.

Maria used her loans to grow a food stand from a small operation in front of her home into a thriving business with multiple locations.

These are just a few of the many borrowers who have used small loans to create lasting change for their families.

What are the interest rates and repayment terms?

Many microfinance organizations charge high interest rates to cover the cost and risk of administering small loans. We take a different approach.

Borrowers pay only 4.25% APY interest. Our goal is to give borrowers every opportunity to succeed.

After receiving a loan, borrowers have a 1–2 month grace period before repayment begins. This gives new or growing businesses time to start generating income. Depending on the loan amount, borrowers typically repay their loans over 10–18 months.

What happens if a borrower has trouble repaying a loan?

Our repayment structure is designed to be manageable for borrowers. However, we understand that emergencies and unexpected challenges can happen.

If a borrower is struggling to make payments, Armando works with them to restructure their payment plan when appropriate. Our goal is not to punish borrowers, but to help them succeed, repay responsibly, and continue building a stronger future for their families.

Do borrowers receive financial education or mentorship?

Yes. We believe loans are most effective when paired with education and support.

Borrowers participate in group business classes where they learn about budgeting, financial literacy, and basic business management. In addition, each borrower receives personal mentorship from Armando throughout the loan process.

This combination of capital, education, and mentorship helps borrowers use their loans wisely and build sustainable businesses.

Still have questions?

We would love to hear from you. Please contact us with any additional questions about our small business loan program.