accion usa presents microfinance 101

Lending. Supporting. Inspiring.

ACCION USA

Microfinance at Work in

the United States

2www.accionusa.org

ACCION- helping millions help themselves

• Starting in the 1970s, experimental programs in Bangladesh, Brazil, and a few other countries extended tiny loans to groups of poor women to invest in micro-businesses.

• ACCION International was founded in 1961 to address the desperate poverty in Latin America's cities. Begun as a student-run volunteer effort in the shantytowns of Caracas, Venezuela, ACCION has a network of lending partners that spans Latin America, Africa, Asia and the United States.

• In 1991, ACCION piloted a program in Brooklyn, New York after seeing many entrepreneurs from Latin America facing a similar challenge of financing in the U.S.

3www.accionusa.org

Domestic Microfinance

• 1991: Pilot program in Brooklyn, New York

• Loans range from $500 to $50,000; average loan is $7,500

• Historical repayment rate: over 92%Source: www.accionusa.org

4www.accionusa.org

The U.S. ACCION Network is a coordinating and resource building entity among five regional offices which elevates the work of the members to create world class microfinance institutions.

1.ACCION Chicago2.ACCION New Mexico-Arizona-Colorado3.ACCION San Diego4.ACCION Texas-Louisiana5.ACCION USA

ACCION U.S. Network

5www.accionusa.org

Network Wide Impact

• $305 million: total dollar value of loans made since inception

• 41,226: total number of loans made since inception

• $7,300: current average loan size

• $41,800 million: amount of active portfolio

• 90%: historical loan repayment rate

6www.accionusa.org

Our Mission

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

7www.accionusa.org

The need for microfinance in the U.S.

There are over 20 million microenterprises in the United States but less than 1% are receiving credit or business assistance due to factors such as:

• 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 BarriersSource: Field Program (The Aspen Institute)

8www.accionusa.org

ACCION USA Portfolio

Professional Services (Office, Med, Education)

20%

Food & Beverage20%

Clothing, Cosmetics, Jewelry & Retail

17%

Transportation15%

Beauty & Salon Services

7%Construction, Repair &

Electronics7%

Entertainment, Media, Telecom & Visual Arts

4%Wholesale

3%Auto & Vehicle

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

2%Arts & Crafts Produc-

tion2%

Manufacturing<1%

9www.accionusa.org

Portfolio Demographics

40% Women

65% Latino 20% African American

10www.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

11www.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.

• 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.

12www.accionusa.org

Loan Process

STEP 1: Client applies for a loan and is quickly informed about eligibility and loan size

STEP 2: .Client submits documents and is interviewed by a loan consultant

STEP 3:Application is reviewed by the underwriting team.

STEP 4:Loan is dispersed if approved

STEP 5:Repayment begins or the client is referred to an organization to improve loan eligibility

13www.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

14www.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

15www.accionusa.org

How can you get involved?

• 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 on our website at

www.accionusa.org!

• Attend our upcoming Microfinance

Harvest Event on November 1st. Email

Erica to attend edorn@accionusa.org