accion usa presents microfinance 101
DESCRIPTION
Overview of domestic microfinance.TRANSCRIPT
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Lending. Supporting. Inspiring.
ACCION USA
Microfinance at Work in
the United States
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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.
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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
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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
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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
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Our Mission
ACCION USA empowers entrepreneurs to invest in their business, family and community through financial literacy and capital.
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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)
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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%
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Portfolio Demographics
40% Women
65% Latino 20% African American
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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
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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.
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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
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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
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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
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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 [email protected]