Guidelines that National Asian American Coalition (NAAC) will Apply in Granting Micro-‐Business Loans on an Average of $12,000 Each with a Maximum of $25,000
The enclosed principles are intended to maximize repayment and minimize defaults.
1. All payments (loans) to the micro-‐business borrower will be deposited in the banking account of the bank providing the micro-‐business loans. Twice a month, Island Pacific Supermarkets will pay the micro-‐business owner (either supplier or servicer) the amount due, which will be deposited in the lending bank. Simultaneously, from the amount due, a portion of the micro-‐business loan will be repaid to the National Asian American Coalition (NAAC) with appropriate interest (based on a low 14% annual basis). For example, if $12,000 is due over a six month period, $1,000 will be repaid to the NAAC biweekly plus appropriate interest ($420 over the six month period).
Similarly, if the loan amount is at the maximum of $25,000 over one year, there will be 24 repayments of approximately $1,104 biweekly plus appropriate interest.
In addition, an application and processing fee of between $150 and $300 will be required to partially cover initial costs of processing and evaluating the borrower.
2. Additional provisions to ensure non-‐default. In the case of suppliers or servicers who use the loan guarantee to purchase equipment or other tangible products, the product will remain in the NAAC’s name as owner until full repayment, including interest, is made.
3. Full notice to borrower of conditions. Both Island Pacific and the NAAC fully concur and support all regulatory protections on borrowing funds, including full, simple and understandable transparency. Therefore, all borrowers will be informed orally, as well as with a simple one-‐page document, of the fact that should they not meet the bimonthly repayment schedule, they are subject, solely in the discretion of Island Pacific, to have their contract with Island Pacific terminated.
4. In certain cases, such as with the Hmong quasi-‐cooperative agricultural group, before any loans are made, the potentially eligible Hmong farmers will be brought together to understand the importance to the success of the Hmong agricultural cooperative, including the individual responsibility of each borrower to the success of the short-‐term and long-‐term project of Hmong farmer sufficiency and prosperity.
5. Requirement of borrowers. To ensure responsible borrowers and minimize default, no loans will be made without an agreement by the borrower to engage in both a pre-‐ and ongoing counseling course. That is, some of the counseling must be completed before any loan is made and the remainder will occur in the remainder months of the loan.
6. All borrowers will, before being considered eligible, be evaluated as to an appropriate debt to income level and likelihood of full repayment within the loan timeline. That is, borrowers who will pose a risk because of their present financial condition will not be eligible for a loan.
Download the required documents below: