Small enterprise support

The implementing institution, PROPEMI (Small and Microenterprise Promotion Program), is a division of the Foundation for Economic and Social Development (FUSADES), a Salvadoran PVO. The project"s central component will be a $3.75 million contribution to PROPEMI"s revolving credit fund, which will bring its available funds to about $8 million. Targeting light manufacturing and service industries -- which tend to generate the most employment -- PROPEMI plans to make 1,493 loans averaging $2,500-$5,000 in size to 1,060 borrowers, 480 of them women. This is expected to create or strengthen more than 7,000 jobs. About 60% of the project"s beneficiaries will be in the 109 municipalities in NRP zones. PROPEMI plans to set an interest rate which will ensure against the decapitalization of the fund over time. PROPEMI will offer training for enterprises that request it in accounting, cost management, administration, marketing and sales, investment, production, quality control, and financial analysis. PROPEMI will also offer a special course in enterprise creation and seminars on themes such as legislation, taxes, banking regulations, and exporting. Cost recovery for training will be the policy. Training will be held at PROPEMI locations in San Miguel, Santa Ana, San Salvador, and in any new areas where PROPEMI may open offices. It is expected that about 13,800 entrepreneurs will receive training. PROPEMI will also provide pre- and post-credit TA to help borrowers improve their enterprises" productivity and loan administration, thus reducing default rates. TA will be particularly intensive for new borrowers, such as those in the NRP zones who have little or no previous credit experience, and for those experiencing repayment difficulties. The project also supports strengthening of PROPEMI"s capabilities. PROPEMI will establish a research and development (R&D) unit to undertake a variety of activities to improve the design and execution of the project, including: (1) preliminary studies/survey of credit demand and target populations; (2) establishment of a monitoring system and a data base to provide information for interim adjustments to the project; and (3) establishment of a management information system to support USAID evaluation and reporting requirements for the project and, more generally, for USAID"s NRP support efforts. PROPEMI will also strengthen its training unit and other operational units, and will open a number of new branch offices in the NRP zones, possibly near the economically promising cities of Usulutan, San Francisco Gotera, Chalatenango, and La Union.