AccionA Leader in U.S. Microfinance

Add Name HereAdd Title Here

June xx, 2012

Agenda

• Who is Accion?

• How to Prepare for a Lender: Credit and Cash Flow

• Accion Products

• More than a Loan: Unique Program Opportunities

Who is Accion?

Accion Network

ACCION Network represents 30% of micro-loan volume in the U.S.

Established in 1991 as the domestic arm of Accion International, a global microfinance organization

Friends & Family Crowdfunding PersonalSavings Equity

Loan Shark Pawn Shops

Credit Cards

ACCION MICROLOANS

BankSBA Loans

An overview of the credit continuum

Equity and Investments

Jesse, recipient of the Sprout Loan at ACCION, owner of Brooklyn Taco. Manhattan, NY

Jason, Accion client and owner of a home-based soap company

*Credit cards, Microloans and Bank Loans build a credit history.

• Limited credit history

• Informal financial documentation

• Small capital needs

• High risk industries

• Under two years in business

• Flexible, community-based lender

• Cater to home-based business

"I wanted to create a welcoming space for all," says Lyn, who began the studio with the help of her first ACCION USA small business loan two years ago. The business became profitable one year after opening and grew to employ twelve part-time employees. "Just as important," she continues, "I wanted to create work for myself that was fulfilling.“

- Lyn Genet Recitas, owner of Neighborhood Holistic in Harlem

Why Accion?

Professional Services (Office, Med, Education)

20%

Food & Beverage20%

Clothing, Cos-metics, Jewelry &

Retail17%

Transportation15%

Beauty & Salon Services

7%

Construction, Repair & Elec-

tronics7%

Entertainment, Media, Telecom

& Visual Arts4%

Wholesale3%

Auto & Vehicle3%

Personal Services (Day

Care, Cleaning, Language)

2%Arts & Crafts Production

2%Manufacturing

<1%20% African

American

Who do we lend to?

What type of business do you have or want to start?

Credit and Cash Flow

Your ability and willingness to pay them back!

What do lenders look for? The C’s of Borrowing

1. Credit

2. Cash Flow

3. Capital

4. Collateral

5. Character

Credit Today: Scoring Systems

35%

15%

10%

30%

10%

FICO Scoring Factors

FICO is still the most widely used system among lenders. Scores range from 300 to 850.

New Credit

Amounts Owed

Types of Credit UsedLength of Credit History

Payment History

Key Strategies for Managing Credit

• Pay on time

• Keep a healthy percentage of available revolving credit

• Diversify your trade lines

• Pay credit cards down one by one

• Be proactive in calling your creditors

• Check credit reports annually for errors at www.annualcreditreport.com

• Use www.myfico.com to see a copy of your FICO credit score

Key Strategies for Managing Credit

Things to Consider: Coverage for a Loan Payment

• Can your business afford the loan payments?

• Is net income greater than 2x the loan payment?

• Can you afford to pay yourself and cover your personal expenses?

How much would my monthly payment be?

Principal Portion

$2,000 $5,000 $10,000 $20,000

Loan Total (including closing fee & UCC fee)

$2,130 $5,280 $10,610 $20,910

Term 12 24 30 40

Monthly Interest Rate

0.75 0.75 0.75 0.75

Monthly Payment

$186 $241 $396 $607

Things to Consider: Bank Statements

• Are deposits greater than withdrawals?

• Are there Insufficient Funds Fees (NSFs)?

• Are the balances declining or increasing over time?

• What are the frequent expenses?

Sample Personal Bank account analysis:

Example of your bank statement analysis

ACCION USA’s Products

Step 1: APPLY Apply and prequalify through Accion’s

unique scoring model.

STEP 2: INTERVIEW Submit documents and get

interviewed by a loan consultant to review strengths and provide

advice.

STEP 3: REVIEW Application is reviewed

considering: credit, character, collateral/cosigner, cash flow, industry, and loan purpose.

STEP 4: DECISION Loan is dispersed if approved or client

is given advice to improve.

STEP 5: RELATIONSHIP Repayment begins and clients receives ongoing business and

financial education.

Accion Loan Process

Heesang, a New York based Accion client

Product Definition

Established Businesses(> 6 months)

Up to $50k

Emerging Businesses(> 6 months but not yet profitable)

Up to $30K with outside cosigner

Sprout Loan(< 6 months)

Home-based/incubator up to $5-*10K without cosigner

Secured Loans $500 and up

Special Programs Women, Veterans, Green, Food and Beverage, Kiva,

Credit Counseling Accion can help you repair your credit

Products and ProgramsProducts and Programs

• Registered business owner

• Credit Score over 525 (FICO)

• No more than $3,000 in past due debt*

• No Bankruptcy in the last year

• No Foreclosure in the last 2 years

• No late payments on mortgage and rent in the last year

Natasha, Accion client and owner of Natasha Wozniak Jewelry. Brooklyn, NY

*Except The Sprout Loan, which cannot exceed $500

Basic Loan Requirements

• Two Forms of personal identification

• Most recent utility bill from home or business

• Past 3 months of personal & business bank statements

• Mortgage note showing terms

• Business lease

Emerging and Sprout loans

• Market study/business plan and 12 months financial projections

Loans over $10,000

• Internal financial statements and last two years tax returns

“The biggest reward for me is seeing the enthusiasm from the benefits of my business by my clients and employees.”

–Jessie, Accion client and owner of Green City Growers Boston, MA

Typical Required Documents

• Loan process: 5 to 10 business days*

• Terms up to 60 months

• Optional auto payments

• Interest fixed rates: start at 8.99% average 11.99%

• 3-5% closing fee or $100 for SBA program

• No prepayment penalties

• Payments applied to principle and interest

*Once all documents are collected

When Sandra moved to New York City, she looked into getting a bank loan. Like many other immigrant entrepreneurs, Sandra had no formal credit history and could not find support from a bank."It was depressing to feel like I couldn't continue being a fashion designer because I couldn't find a loan," Sandra remembers.

–Sandra, Accion client and designer at Sandra Baquero talking about how she came to Accion

Affordable Loans

• One-on-one: We provide coaching throughout the loan process on credit, cash flow and record keeping

• Online: Free webinars and a monthly newsletter help create meaningful connections with our clients

• Partnerships: We team up with other organizations to leverage resources and maximize strengths “With Accion, it was more than just a

loan. Through promotional opportunities, Accion helped to get my business name out there.”

–Kari, Accion client and owner of Morris Kitchen

More Than a Loan

More than just a loan:

Unique Opportunities

•Business education

•Access to mentors and networks

• Seasonal product integration and catering

Sam Adams Brewing the American Dream

• Educational events

• High profile mentors

“I have been so impressed with the mentors at the events. Every single one of them has said something memorable to me that has inspired action in my business, I can see that they really care and want to help us succeed.”

Natasha, Accion client and owner of Natasha Wozniak Jewelry. Brooklyn, NY

Tory Burch Partnership

Luis's road to self-employment was not easy. Once unemployed and homeless, Luis's life changed when he found work making deliveries for a local bakery. On the morning of September 11, he made his usual delivery to the World Trade Center when his truck got lost in the rubble of the failing buildings. Through Kiva, Accion lent Luis the money he needed to get his business back in shape.

Luis, Accion client. New York, NY

• Loans up to $10,000

• Flexible loan requirements

• Publicity for your business

Kiva.org

Yelp

• Business coaching events

• Assistance with your Yelp profile

• Low rate at 8.99%

• Increased lending flexibility

• Coaching and mentorship through SCORE, Veterans across America, and SBS

Loans for Veterans (New York Only)

• Over 6,000 Twitter followers twitter.com/accion_usa

• 2,000 people “like” our Facebook page www.facebook.com/accionusa

• 30,000 subscribe to our monthly newsletters www.accionusa.org/email

• Over 40,000 visits a month to our website www.accionusa.org

• Partnership with http://dinero.univision.com/pequena-empresa

Accion’s Online Presence

Contact NAME at XXX-XXX-XXXX and xxx@accionusa.org

Refer to online application at www.accionusa.org/apply*

Have client fax in paper application to XXX-XXX-XXXX

To Refer a Business Owner