accion usa: microfinance at work in the united states

Lending. Supporting. Inspiring.

ACCION USA

Microfinance at Work in

the United States

2www.accionusa.org

Our Mission

ACCION USA empowers entrepreneurs to invest in their business, family and community through financial literacy and

capital.

3www.accionusa.org

Fast Facts about ACCION USA

History:

• Pilot program in Brooklyn, NY in 1991

Branch Locations:

New York, Boston, Atlanta, Miami and Internet loans

Dollars lent:

• 122 Million

Loan size:

• $500-$50,000; average $7,500

Interest rates:

8.99-15.99%

Historical Repayment Rate:

Over 92% repayment

4www.accionusa.org

Portfolio Demographics

40% Women

65% Latino 20% African American

5www.accionusa.org

ACCION USA Portfolio

Professional Services (Office, Med, Ed-ucation)20%

Food & Beverage20%

Clothing, Cosmetics, Jewelry & Retail

17%

Transportation15%

Beauty & Salon Services7%

Construction, Repair & Electronics

7%

Entertainment, Media, Telecom & Visual Arts

4%Wholesale

3%Auto & Vehicle

3%Personal Services (Day Care, Cleaning, Language)

2%Arts & Crafts Production

2%Manufacturing

<1%

6www.accionusa.org

Client Snapshot

40% Women

65% Latino 20% African American

87% are low-to-moderate income

90% are minority

75% have lived in U.S. over 10 years

38% are home-based businesses

45% are first-time borrowers

Source: 2009 Impact Study and ACCION USA Portfolio as of 12/31/2010

7www.accionusa.org

Why are we needed?

There are over 20 million microenterprises in the United States, but less than 1% are receiving credit or business assistance

• Lack of credit or low credit score

• Some industries are considered to be high risk

• Lack of financial documentation or records

• Business is informal—no commercial track record

• Loan amount needed is too small

• Language Barriers

Source: Field Program (The Aspen Institute)

8www.accionusa.org

The need for microfinance in the U.S.

• 40 million households (106 million people) have limited access to mainstream financial institutions in the U.S. and 28 million people are completely unbanked.

• Microenterprises (5 employees or less) account for approximately 18% of employment in the U.S. and create 900,000 jobs a year.

• Predatory lenders charge average annual interest rates over 300%— and accounted for over $42 billion in loan volume in 2008.

9www.accionusa.org

Loan Requirements

• Have a credit score of 575 or more.

• Have not have declared bankruptcy in the past 12 months or foreclosure in the past 24 months

• Have not had any late rent or mortgage payments in the past 12 months

• Be up-to-date on all bills

• Not have more than $3,000 in past due debt, generally acquired under emergency circumstances (such as layoff or illness)

• Exhibit steady cash flow and the ability to support monthly loan payments.

• Be able to provide a cosigner, if needed

• If you have a mortgage, it must be fixed-rate or an adjustable rate mortgage that does not adjust during the term of the loan.

10www.accionusa.org

Loan Process

STEP 1: Make ConnectionAnd Pre-Screen Client

STEP 2: .Formal Pre-Approval Process and begins Loan Application

STEP 3:Client submits complete loan application. Loan Consultant interviews the client.

STEP 4:Loan Application is sent to Underwriting Team

STEP 5:Underwriter Approves Loan and Loan is Dispersed

STEP 6:Loan Enters Repayment

11www.accionusa.org

Our Impact

• We create sustainable businesses: The business survival rate among ACCION USA clients is 98% for established businesses and 89% for start-up businesses.

• We create employment in low-to moderate-income communities: On average, each ACCION USA small business loan recipient creates 3 jobs (including the borrower).

• We create fair wages: Jobs created by ACCION USA borrowers pay 33% more ($10.80/hour) than the federal minimum wage ($7.25/hour).

• We improve their quality of life: Clients reported a 19% median increase in take-home pay in the midst of economic distress.

Source: 2010 MicroTest Outcomes Survey in partnership with the Aspen Institute

12www.accionusa.org

Stories of Success-Partnerships

1 The Small Business Share of GDP, Katherine Kobe, Economic Consulting Services, LLC; 2 The Small Business Administration (2006)

Luis Zepeda Alvarez An ACCION USA borrower featured on Kiva

13www.accionusa.org

How to be involved?

• Attend the Microfinance USA

conference in New York City, May 23-

24th 2011- Register today!

• Tell business owners about ACCION

USA- they can apply online at

www.accionusa.org

• Sign up for our news about upcoming

events and important news in

microfinance!