In many parts of the world, micro, small-, and medium-sized enterprises (MSMEs) in Honduras struggle to secure loans from formal banks. Minimum requirements often include collateral or an existing credit history, which many MSMEs cannot produce. To overcome this barrier, the USAID/Honduras Transforming Market Systems (TMS) Activity and its partners have found that small grants, or seed capital, when paired with technical assistance, can stabilize businesses impacted by crises.

On the receiving end of this seed capital are Honduran businesses still recovering from Hurricanes Eta and Iota and the COVID-19 pandemic. The TMS Activity recently partnered with the Chamber of Commerce and Industry of Cortés (Camara de Comercio y Industria de Cortés, CCIC) and the Red Cross of Honduras to distribute small grants to 129 businesses in the coastal Sula Valley of the Cortés Department.

Each business will receive a one-time, non-reimbursable capital investment of $1,258 as part of a $160,000 fund seeded by the Red Cross of Honduras. Of these businesses, 57 are led by women and 18 are led by young people. They span the sectors of manufacturing, wholesaling, retail sales, and industrial services.

“Through this partnership, we ultimately seek to support the livelihoods of families affected by Hurricanes Eta and Iota. The CCIC, along with TMS, will provide technical training and support so that MSMEs have a clear path to grow. These funds from the Honduran Red Cross, however, are the perfect addition to the assistance that we will provide.”

Maritza Soto, SME coordinator at CCIC

The TMS Activity and CCIC selected the 129 businesses from the chamber’s existing technical assistance participants who have reached a point of having solid business and investment plans. The TMS Activity and CCIC will continue to provide support throughout the grant disbursement process and the next 12 months in the form of intensive training and mentoring in marketing, accounting, sales, finance, and management.

To date, the TMS Activity has attracted $1.73 million in non-repayable seed capital for investment in 5,261 MSMEs. These investments help businesses reactivate operations, adapt their business models, create new or better jobs, and increase sales. Funders include USAID, the International Community Foundation, Grupo Terra, Alutech, and the Red Cross of Honduras.

Learn more about the USAID/Honduras Transforming Market Systems Activity.

Learn more about our work in Honduras.