Judicial Watch: HHS Doesn’t Track Refugees’ Microenterprise Loan Defaults

 

(CNSNews.com) – The U.S. Department of Health and Human Services (HHS) awarded 3,096 small business loans to refugees on public assistance over the past six years, but failed to track the number of loans that defaulted, according to a recent report from Judicial Watch.

The money was distributed via the Microenterprise Development Program (MDP), which “helps refugees develop, expand or maintain their own businesses and become financially independent,” according to the program’s website.

The program is a project of HHS’ Office of Refugee Resettlement (ORR), which works to integrate refugees into American society so that they can “maximize their potential.” Specifically, poor refugees with no credit history or financial assets, including those who are not citizens, are the targeted recipients of the government loans.

But Judicial Watch says the MDP program is a “risky operation” because it “blindly gives public funds to poor foreign nationals with no roots in the U.S.” and with “no follow up to assure the cash is paid back….The last time HHS filed an official annual report on this questionable cash giveaway was 2011.”

The ORR is currently resettling tens of thousands of refugee arrivals. According to the Refugee Processing Center, 41,424 refugees were admitted into the United States between October 2015 and May 2016.

Each MDP loan is worth a maximum of $15,000. The MDP website claims that over the last 19 years, refugees have used the money to create 10,800 micro-businesses, 88 percent of which still survive. The site also says that the program has helped create 10,000 jobs, and taught entrepreneurial skills to 24,000 refugees.

The program states that 98 percent of the loans are repaid, which is “far higher than the average repayment rate in the industry.”

However, Judicial Watch counters that HHS does not have the hard records to support this claim.  

In February 2016, the watchdog group filed a Freedom of Information Act (FOIA) request with HHS for its MDP loan repayment data.

In March, HHS responded, saying that it “does not have a compilation of the information you seek concerning the amount of loans in default under the program.” However, it did note that the ORR is “preparing to collect this information in the future.”

HHS confirmed that it does not have repayment data for all the microenterprise loans, telling CNSNews.com in a statement that: “Grantees often include loan repayment information on their individual program reports, but are not presently mandated to do so.”

“Unlike commercial banks or other lending institutions, HHS doesn’t keep track of default rates on loans issued through the Microenterprise program. This is astonishing considering that these are taxpayer dollars being furnished in the form of loans to foreign nationals granted refuge in the United States,” Judicial Watch commented.

The watchdog groups estimates that if all of the record 558 MDP loans granted last year were for the maximum amount of $15,000, there would be $8.37 million in taxpayer dollars unaccounted for just in 2015 alone.

Government MDP loans are not the only ones available to newly arrived refugees.

The private International Rescue Committee (IRC) also provides microloans as part of a program that has been accredited by the U.S. Department of the Treasury.   

“Financial liquidity and access to affordable financing is essential for any individual or family to become economically independent and self-sufficient,” said Kasra Movahedi, IRC’s technical advisor for economic empowerment, in a press release accompanying the accreditation announcement.

Movahedi told The Wall Street Journal in January that the annual interest rate for the IRC’s loan program is fixed at 7.25 percent, and that closing fees are very low. He said he hopes that by 2020, his organization will have $4.4 million in outstanding loans, with each one worth an average of $6,500.

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