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Accion Network Established in 1991 as the domestic arm of Accion International, a global microfinance organization ACCION Network represents 30% of micro-loan volume in the U.S.
An overview of the credit continuum*Credit cards, Microloans and BankLoans build a credit history. Equity and Investments Bank SBA Loans ACCION MICROLOANS Credit Cards Loan Shark Pawn ShopsFriends & FamilyCrowdfunding Jesse, recipient of the SproutPersonalSavings Loan at ACCION, owner ofEquity Brooklyn Taco. Manhattan, NY Jason, Accion client and owner of a home-based soap company
Why Accion? • Limited credit history • Informal financial documentation • Small capital needs • High risk industries"I wanted to create a welcoming space for • Under two years in businessall," says Lyn, who began the studio withthe help of her first ACCION USA smallbusiness loan two years ago. The business • Flexible, community-based lenderbecame profitable one year after openingand grew to employ twelve part-time • Cater to home-based businessemployees. "Just as important," shecontinues, "I wanted to create work formyself that was fulfilling.“- Lyn Genet Recitas, owner ofNeighborhood Holistic in Harlem
Who do we lend to? Beauty & Salon Services 7% Transportation Construction, Rep 15% air & ElectronicsWhat type of 7% Entertainment, Me Clothing, Cosmetibusiness do cs, Jewelry & Retail dia, Telecom & Visual Arts 4%you have or 17% Wholesale 3%want to start? Auto & Vehicle Food & Beverage 3% 20% Professional Personal Services Services (Day (Office, Med, Educ Care, Cleaning, Language) ation) 2% 20% Arts & Crafts Production 2% Manufacturing 20% African <1% American
Credit and Cash Flow
What do lenders look for? The C’s of Borrowing Your ability and willingness to pay them back! 1. Credit 2. Cash Flow 3. Capital 4. Collateral 5. Character
Credit Today: Scoring Systems FICO Scoring Factors New Credit 10% Payment History 35% 30% Amounts Owed 15% 10% Length of Credit History Types of Credit Used FICO is still the most widely used system among lenders. Scores range from 300 to 850.
Key Strategies for Managing Credit 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
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 $2,000 $5,000 $10,000 $20,000 Portion Loan Total $2,130 $5,280 $10,610 $20,910 (including closing fee & UCC fee) Term 12 24 30 40 Monthly 0.75 0.75 0.75 0.75 Interest Rate Monthly $186 $241 $396 $607 Payment
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?
Example of your bank statement analysisSample Personal Bank account analysis:
ACCION USA’s Products
Accion Loan Process Step 1: APPLY Apply and prequalify through Accion’s unique scoring model. STEP 2: INTERVIEW Submit STEP 5: RELATIONSHIP Repayment documents and get interviewed by a loan begins and clients receives ongoing consultant to review strengths and provide business and financial education. advice. Heesang, a New York based Accion client STEP 3: REVIEW Application is STEP 4: DECISION Loan is dispersed reviewed considering: if approved or client is given advice to credit, character, collateral/cosigner, cash improve. flow, industry, and loan purpose.
Products andand Programs Products ProgramsProduct DefinitionEstablished Businesses Up to $50k(> 6 months)Emerging Businesses Up to $30K with outside cosigner(> 6 months but not yetprofitable)Sprout Loan Home-based/incubator up to $5-*10K(< 6 months) without cosignerSecured Loans $500 and upSpecial Programs Women, Veterans, Green, Food and Beverage, Kiva,Credit Counseling Accion can help you repair your credit
Basic Loan Requirements• 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
Typical Required Documents• 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 leaseEmerging and Sprout loans “The biggest reward for me is seeing• Market study/business plan and 12 the enthusiasm from the benefits of months financial projections my business by my clients and employees.”Loans over $10,000 –Jessie, Accion client and owner of• Internal financial statements and last two Green City Growers years tax returns Boston, MA
Affordable Loans • 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 programWhen Sandra moved to New York City, she • No prepayment penaltieslooked into getting a bank loan. Like manyother immigrant entrepreneurs, Sandra had no • Payments applied to principle andformal credit history and could not find support interestfrom a bank."It was depressing to feel like Icouldnt continue being a fashion designerbecause I couldnt find a loan," Sandraremembers.–Sandra, Accion client and designer at SandraBaquero talking about how she came to Accion *Once all documents are collected
More Than a Loan • 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“With Accion, it was more than just aloan. Through promotional opportunities, and maximize strengthsAccion helped to get my business nameout there.”–Kari, Accion client and owner of MorrisKitchen
More than just a loan:Unique Opportunities
Sam Adams Brewing the American Dream • Business education • Access to mentors and networks • Seasonal product integration and catering
Tory Burch Partnership• 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
Kiva.org• Loans up to $10,000• Flexible loan requirements• Publicity for your business Luiss road to self-employment was not easy. Once unemployed and homeless, Luiss 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
Yelp• Business coaching events• Assistance with your Yelp profile
Loans for Veterans (New York Only) • Low rate at 8.99% • Increased lending flexibility • Coaching and mentorship through SCORE, Veterans across America, and SBS
Accion’s Online Presence • 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
To Refer a Business OwnerContact NAME at XXX-XXX-XXXX and firstname.lastname@example.orgRefer to online application at www.accionusa.org/apply*Have client fax in paper application to XXX-XXX-XXXX