Social Entrepreneurship Program

The Social Entrepreneurship Program (SEP) is an IDB program founded in 1978 as the Small Projects Fund, and since 2007 it has been managed by the MIF. Since its inception, the SEP has approved 750 projects worth US$ 451 million in 26 countries, directly benefiting more than 990 thousand people. The Social Entrepreneurship Program stands out for its efforts to benefit low-income, marginalized and diverse populations; prioritizing those living in rural or vulnerable areas, suffering from the scarcity of basic services or that are involved in productive activities or microenterprises that are commonly perceived as high risk ventures, with low profitability. The SEP’s value lies in being a flexible financer that supports the growth and strengthening of business solutions that impact the population, and contribute to the reduction of poverty, exclusion, and unemployment.

The Social Entrepreneurship Program in detail

The program works to address the socioeconomic problems of the population by promoting the development and consolidation of high impact solutions in rural business, rural finance and basic services.

The SEP takes on greater risks and offers long term loans under flexible conditions, financing a wide variety of activities such as productive assets, working capital, basic infrastructure for basic services or capital for credit portfolio, among others. A typical SEP project combines long-term loan operations of up to US$ 1 million and technical assistance of up to US$ 250,000, in addition to contributions from the local counterpart. Additionally, it can be used as a non-refundable payment instrument based on results, designed to generate incentives for impact, for social enterprises. The repayment period of the loans is up to 8 years, with a maximum grace period equivalent to the project execution period. The interest rate on the loans and the amount of counterpart contributions will depend on the characteristics of the project and the borrower.

Any combination of financing is provided to private companies and institutions with a business model that has been tested on a small scale, has generated revenue, and requires refinement and expansion; companies that have identified market potential and a clear impact on the income of vulnerable or low-income populations. The projects are intended to enable businesses to capitalize and focus their efforts on growth and strengthening. Thus, projects support the sustainability of the initiatives, with an ideal objective to scale the model and prepare entrepreneurs to access commercial financing. All projects are subject to a due diligence process, and are evaluated based on their finances, borrowing capacity, feasibility of the model and its potential, and its impact on development.

SEP eligibility criteria

About the executing agencies:

  • Companies and institutions with social and environmental impact objectives, NGOs, foundations, cooperatives, producer associations, public-private alliances with experience in providing financial services or business development services aimed at vulnerable populations with an entrepreneurial approach;

  • Legally constituted to sign loan and technical cooperation agreements with the MIF, with a seniority of at least three years; with financial solvency (presentation of financial statements for the last three years) to take on and repay the loan and proven capacity to administer MIF resources;

  • That its activities benefit populations of the IDB's member countries (although they may have their headquarters in the USA or Europe);

  • Capacity to innovate and increase the access of excluded groups to new financial and non-financial services

  • Institutional and financial capacity to implement credit programs together with technical cooperation activities; or willing to separate the two types of programs to be handled by specialized institutions in each area.

About the projects:

  • Projects should directly address low-income, excluded or vulnerable groups in the fields of (i) rural businesses (climate-smart agriculture, value chains, production, processing and marketing), (ii) rural finance (financial inclusion and support to microentrepreneurs and rural producers), and (iii) basic services (including support to private providers of alternative services in areas such as education, health, drinking water, electricity or renewable energy, among others);

  • Projects must be sustainable and justify their ability to repay the loan;

  • Each project should co-assess the need and relevance of the use of the technical cooperation and reimbursable financing components, identifying the activities of use and investment.

How to apply for funding: