Date post: | 15-May-2015 |
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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