YOUTH FINANCIAL SERVICES

Fundación ParaguayaYouth Loan Program

WHO WE ARE

Fundación Paraguaya is a cutting-edge social enterprise, which develops innovative solutions to poverty and unemployment in Paraguay and proactively disseminates them worldwide.

FP is an entity that has dedicated 23 years to promoting entrepreneurship, enabling people of limited resources to create jobs and increase their family income.

OUR BUSINESS MODEL

Fundación Paraguaya is a self-sufficient social enterprise that promotes urban and rural entrepreneurship through three interrelated strategies:

A Microfinance program that supports micro entrepreneurs and emerging entrepreneurs generally relegated by other microfinance institutions.

An economic education program for children and young people (Junior Achievement).

A self sustainable agricultural school

OUR BUSINESS MODELThe three programs are separated in terms of budgets and finances, but are strongly integrated at the operational level so that each program enriches and is enriched by the other two.

This synergy gives “added value” to each of the three programs and is the force that guides the institution’s “business model.” Additionally, it is an important ingredient in the success of the microfinance program.

YOUTH LOAN PROGRAM

YOUTH IN PARAGUAY 62.1% of the population is under 30 years

old. 5.6% open unemployment 26.5% sub-employment

Young people are the most affected by this situation

Ciudaddel este

EncarnaciónSan Ignacio

Carapeguá

Ybycui

CoronelOviedo

Caaguazu

Santani

Caacupe6

Greater Asunción Area

Ofices: Matriz, Asunción, San Lorenzo, Luque, Villa Elisa, M.R.Alonso. Lambare

Ita

Chaco

Western region (Chaco): 10% of the population.

Eastern region : 90% of the population.

• 30,366 clientes• Portolio US$ 14 millions• Overdue loans: 2,27%• 21 Offices• 140 cities/220• 240 employees• Metodology: individuals,

solidary groups, village banking• Amount: fromUS$ 40 to US$

25.000• Interest rate: market rate

Pilar

V.Rica

Canendiyu

San Pedro Amambay

WHY A YOUTH LOAN PROGRAM?

A neglected target market of young individuals who showed interest in creating their own micro enterprise, but did not have the chance to have access to loans. Sons and daughters of our clients Students of our economic education program

FP decided to develop a specific financial product oriented to young micro entrepreneurs between 18 to 29 years old, from urban and rural areas.

OUR COSTUMERS PROFILE 6700 young entrepreneurs Age 18 to 29 years old Most of them come from poor families

and do not have the chance to enter into the work force due to the lack of opportunities or sufficient training.

These young individuals generally decide to start their own business as an alternative to unemployment and poverty

60% from rural areas and 40% are in urban and semi- urban areas.

40% of them have successfully concluded high school and the majority of the remaining 60% has successfully concluded elementary school.

Loans adding up to 3 million dollars Average loan of 500$.

OUR PRODUCTS

LOAN SERVICE FOR YOUNG MICRO ENTREPRENEURS

Grants loans for the creation and expansion of micro and small enterprises.

Oriented to start up activities or for work and investment capital. The amounts range between 40$ to $5,000. 500$ is the average

loan. Repayment terms vary from 2 to 24 months; most loans are re-

paid at a 12 to 24-month period. Payments: weekly, bi-weekly or monthly basis. The interest rates are those established by the market, around

30%. Loans are granted based on the payment capability, adjusted to

the production capability of the micro entrepreneur and not necessarily based on guarantees.

Parents assume the position of cosigners, which ensures the family support of the business and allows the correct use of the loan.

We provide access to financial services aimed at strengthening their personal and business skills

Loan officers: Provides technical assistance and

management training Assistance in drafting accounting

statements and investment plans Business Incubator

Training for the elaboration of business plan.

Assistance on: accounting, financial, taxation and human resources issues.

Conducts training on marketing, finance and production

Provides commercial contacts and business opportunities.

LOAN SERVICE FOR YOUNG MICRO ENTREPRENEURS

PRODUCTIVE LOAN PROGRAM Grants loans to the graduates from the

Agricultural School so that they can apply what they have learnt at School in their communities of origin.

Allows young people to develop feasible projects.

All of the graduates present their business plan as part of the academic curriculum and all of them are analyzed by a loan committee. As a result, credit lines are financed for the projects.

The amounts range from100$ to 5,000$.

The loan amounts, payment term and interest rates vary depending of each project.

This loan “closes the circle” between theory and practice, deepening the impact and sustainability of our entrepreneurial education program.

VILLAGE BANKING Targets groups of micro enterprising women. Loan amounts vary per member according to each

one’s payment capability, they range between 20$ and 330$.

Each cycle has a minimum and maximum amount established and culminates in terms between 2 to 4 months.

Payments are weekly or bi-monthly depending on the decisions made by the women bankers.

The program encourages savings, making it mandatory that each member save 10% on the amount of their personal share.

The program offers training in areas such as: Family Budget; Sales Costs; Self-Esteem; Leadership, among others.

Two mandatory training sessions are offered in each cycle in addition to coordinated training that crosses all phases.

OUR DIFFERENCE FROM OTHER MFI’S

Two key aspects: We concentrate our efforts on

loans of low amounts granted to the smallest microentrepreneurs and entrepreneurs initiating activities, which are generally excluded by other financial entities.

 Second, we offer more than just loans. Thanks to our particular business model, we also provide a broad array of educational, business, and community development services to the young client.

This is a self-sufficient and profitable program in financial terms, showing that it is possible to successfully finance young people.  

OUR MAIN CHALLENGES Legal Restriction in terms of

age Misconceptions about youth:

Image associated to bad payment and late repayments

 Need of a higher level of follow-up and assistance

How we overcame this challenges

Joint signature with parents Loan officer training Business Incubator

SOME LEASSONS WE LEARNED Supporting the loan and

providing financial services

Evaluation of the family situation.

Loan officer oriented towards the work with youth and with experience in handling different types of business

Timely loans Work together to

understand the market and its needs

AGUIJE