accion usa: microfinance at work in the united states
TRANSCRIPT
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Lending. Supporting. Inspiring.
ACCION USA
Microfinance at Work in
the United States
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2www.accionusa.org
Our Mission
ACCION USA empowers entrepreneurs to invest in their business, family and community through financial literacy and
capital.
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ACCION USA History and Portfolio
» ACCION USA offers loans from $500 to $50,000 for small business
and credit development purposes at interest rates ranging from 8.99
– 15.% And Financial Education tools and resources.
» ACCION USA has lent $122 million since 1991: With
approximately 3,000 active borrowers across 46 states.
» ACCION USA has branch locations in New York, Boston, Atlanta,
and Miami and is able to serve the business coast-to-coast through
our online application
» The ACCION Network has supported over 36,000
microentrepreneurs with $250 million. This network of licensees
serving TX, LA, NM, CO, AZ, IL, and CA.
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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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Portfolio by Industry
Professional Services (Office, Med, Education)
20%
Food & Beverage20%
Clothing, Cosmetics, Jewelry & Retail
17%
Transportation15%
Beauty & Salon Services7%
Construction, Repair & Electronics
7%
Entertainment, Media, Telecom & Visual Arts
4%
Wholesale3%
Auto & Vehicle3%
Personal Services (Day Care, Cleaning, Language)
2%Arts & Crafts Production
2%Manufacturing
<1%
Clients work mostly in food & beverage, retail, transportation and beauty
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Why are we needed?
Over 850,000 microenterprises account for over 92% of privates-sector businesses in NYC, and many cannot access capital because…
• 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: Microenterprise Employment Statistics published by the Association for Enterprise Opportunity (AEO)
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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.
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Decision Factors
Credit History Credit Score 575 and above Relatively low balances Healthy % of available credit Open accounts that are current. Zero FICO score is acceptable for credit start loans
CharacterReferences: residential and commercial landlords, supplier, client and/or personal references.
Cash FlowAn examination of sales versus expenses must demonstrate capacity to repay loan. Business and personal bank statement review.Start-ups must present 12 months of financial projections.
Loan PurposeDetailed list of expenditures.Contributes to the positive growth of business. Loan uses that will clearly improve the revenues and/or profits of the business
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Background Information Prior Learning – 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
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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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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!