Microfinance in Our Backyard

Hosted by Grameen America & ACCION

USA

The Need for Domestic Microfinance

•1 in 7 or ~44 million people in the U.S. live in poverty (*28 million of these are women)

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

•400%-3,000% interest rates are charged by some alternative lenders, such as loan sharks and fringe banks “FY 2008 Program Performance

Data Overview”. FIELD: Aspen Institute

Impediments to Domestic Entrepreneurs

Loan amounts offered too big Most banks issue loans averaging $194,000 There are 700 microenterprise programs in the U.S., 369 have

a loan average of $35,000 Poor credit history

Min. Required = mid 650s Avg. = mid 750’s

Insufficient business history Businesses are start-ups, off the books, initial phases

Group vs. Individual Independent business culture Looser ties to community

Gender Breakdown Men primary owners of small businesses

Barrier to Entry Start up and operational costs are much higher

Grameen America’s Mission

To provide affordable microloans to financially empower low-income entrepreneurs:

Capital to invest in a small business to create self-employment

Financial Literacy and education opportunities

Mentoring and strong support network to build communities

Access to Savings and a path toward establishing a credit history

Grameen America Operational Overview

• Minimum of 55 hours of training

• Building scores of > 640

• $750,000 deposited

•Lent out $17MM• 99% Repayment Rate

• Low cost loans support income generating activity• Maximum first loan is $1500• 6 to 12 month terms

Provide Capital

• Members open savings account with local bank• Minimum $2 per week savings encouragedBuild Savings

• Repayments reported to Experian• Many borrowers have no prior credit historyEstablish Credit

• Borrowers participate in 5-day training, wherethey learn loan terms, open savings account & develop business plan.

• Weekly meetings foster financial education.

DevelopFinancial Literacy

Grameen America Model

2 3

5 days

$

Form group

Complete training /

Start saving

1

4 5

6-12 months NEW LOAN

Repay loan

Grameen America Borrowers

Live below the poverty

line

Average income in 2009 was $15,000

90% single mothers

Interest and determination

to start a business

Nowadays there are not many jobs out there so someway we need to survive. We’re making it and Grameen America has helped us do that. - Lisette, GA Borrower

Facts about ACCION USA

History: Pilot program in Brooklyn, New York in 1991 Locations: New York, Boston, Atlanta, Miami and Internet loans (serving over

46 States)

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

ACCION USA Portfolio

Professional Services (Office, Med, Education)

20%

Food & Bev-erage20%

Clothing, Cosmetics, Jewelry & Retail

17%

Transportation15% Beauty & Salon

Services7%Construction, Repair &

Electronics7%

Entertainment, Media, Telecom & Visual Arts

4%Wholesale

3%Auto & Vehicle

3%

Personal Services (Day Care, Cleaning, Language)

2%Arts & Crafts Pro-

duction2%

Manufacturing<1%

65% Latino

20% African American

40% Women

Client Snapshot

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

Loan Process and Requirements

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

ACCION USA Impact

• 46 states served

• 65, 000 jobs created

•30,000 clients served

•Lent out $131MM•92% repayment rate

We create sustainable businesses

We create employment in low-to moderate-income

communities

We create fair wages

Clients reported a 19% median increase in take-home pay in the midst of economic distress.

We improve quality of life

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

On average, each ACCION USA small business loan recipient creates 3 jobs (including the borrower).

Jobs created by ACCION USA borrowers pay 33% more ($10.80/hour) than the federal minimum wage ($7.25/hour).

Join us at Microfinance USA Conference May 23-24th in New York City!

• Microentreprenur Client Tours – only a few spots spots left to see microfinance in action!

• Social Entrepreneurship and Microfinance with Susan Davis and Jessica Jackley

• Adam Davidson from NPR’s Planet Money

•Student price $75, one-day tickets are now available for non-students.

Register today at www.microfinanceusaconference.org