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Community and Partner Outreach Part 2<br />How We Lend.<br />
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Outreach Training Part Two


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Outreach Training Part Two

  1. 1. Community and Partner Outreach Part 2<br />How We Lend.<br />
  2. 2.                        <br />You aren't signed in     Sign In    Help<br />Search <br /><ul><li>Search       
  3. 3. · Everyone's Uploads
  4. 4. Groups
  5. 5. Flickr Members
  6. 6. For a Location
  7. 7. Applications
  8. 8. Home
  9. 9. The Tour
  10. 10. Sign Up
  11. 11. Explore       
  12. 12. Explore Page
  13. 13. Last 7 Days Interesting
  14. 14. Popular Tags
  15. 15. Calendar
  16. 16. Most Recent Uploads
  17. 17. Video on Flickr
  18. 18. Galleries
  19. 19. Explore Analog
  20. 20. Flickr Clock
  21. 21. Getty Images</li></ul>World Map<br /><ul><li>Places</li></ul>The Commons<br /><ul><li>Creative Commons</li></ul>FlickrBlog<br /><ul><li>
  22. 22. The App Garden
  23. 23. Camera Finder
  24. 24. Upload</li></ul>Photo / All sizes<br />Purpose<br />This presentation will provide the following information so you can <br />feel comfortable speaking to local small business owners and <br />community organizations: <br /><ul><li>Terminology
  25. 25. Eligibility
  26. 26. Loan Application Process
  27. 27. Loan Products
  28. 28. Additional Services
  29. 29. Case Examples and Knowledge Check</li></ul>Looking for the HTML code and photo file link? Check out this FAQ. <br />   Bookmark on Delicious<br /><ul><li>You
  30. 30. Sign in
  31. 31. Create Your Free Account
  32. 32. Explore
  33. 33. Places
  34. 34. Last 7 Days
  35. 35. This Month
  36. 36. Popular Tags
  37. 37. The Commons
  38. 38. Creative Commons
  39. 39. Search
  40. 40. Help
  41. 41. Community Guidelines
  42. 42. The Help Forum
  43. 43. FAQ
  44. 44. Sitemap
  45. 45. Get Help
  46. 46. Flickr Blog
  47. 47. About Flickr
  48. 48. Terms of Use
  49. 49. Your Privacy
  50. 50. Copyright/IP Policy
  51. 51. Report Abuse
  52. 52.                
  53. 53. Deutsch
  54. 54. English
  55. 55. Español
  56. 56. Français
  57. 57.        
  58. 58. Italiano
  59. 59. Português
  60. 60. Tiếng Việt
  61. 61. Bahasa Indonesia</li></ul>Copyright © 2011 Yahoo! Inc. All rights reserved. <br />
  62. 62.                        <br />You aren't signed in     Sign In    Help<br />Search <br /><ul><li>Search       
  63. 63. · Everyone's Uploads
  64. 64. Groups
  65. 65. Flickr Members
  66. 66. For a Location
  67. 67. Applications
  68. 68. Home
  69. 69. The Tour
  70. 70. Sign Up
  71. 71. Explore       
  72. 72. Explore Page
  73. 73. Last 7 Days Interesting
  74. 74. Popular Tags
  75. 75. Calendar
  76. 76. Most Recent Uploads
  77. 77. Video on Flickr
  78. 78. Galleries
  79. 79. Explore Analog
  80. 80. Flickr Clock
  81. 81. Getty Images</li></ul>World Map<br /><ul><li>Places</li></ul>The Commons<br /><ul><li>Creative Commons</li></ul>FlickrBlog<br /><ul><li>
  82. 82. The App Garden
  83. 83. Camera Finder
  84. 84. Upload</li></ul>Photo / All sizes<br />Terminology<br />Cash Flow: Analysis of monthly revenue and expense trend.<br />2:1 coverage: The monthly payment for an ACCION USA loan <br />cannot be more than half of the client’s monthly income after <br />expenses have been deducted.<br />Business Performance: Analysis of business trend.<br />Business Plan: A statement of business goals, why they are <br />attainable, and the plan for reaching them.<br />FICO score: Credit score representing creditworthiness of a <br />person and the likelihood of that person repaying his or her <br />debts.<br />Looking for the HTML code and photo file link? Check out this FAQ. <br />   Bookmark on Delicious<br /><ul><li>You
  85. 85. Sign in
  86. 86. Create Your Free Account
  87. 87. Explore
  88. 88. Places
  89. 89. Last 7 Days
  90. 90. This Month
  91. 91. Popular Tags
  92. 92. The Commons
  93. 93. Creative Commons
  94. 94. Search
  95. 95. Help
  96. 96. Community Guidelines
  97. 97. The Help Forum
  98. 98. FAQ
  99. 99. Sitemap
  100. 100. Get Help
  101. 101. Flickr Blog
  102. 102. About Flickr
  103. 103. Terms of Use
  104. 104. Your Privacy
  105. 105. Copyright/IP Policy
  106. 106. Report Abuse
  107. 107.                
  108. 108. Deutsch
  109. 109. English
  110. 110. Español
  111. 111. Français
  112. 112.        
  113. 113. Italiano
  114. 114. Português
  115. 115. Tiếng Việt
  116. 116. Bahasa Indonesia</li></ul>Copyright © 2011 Yahoo! Inc. All rights reserved. <br />
  117. 117. Eligibility<br /><ul><li>Our loan guidelines are in place to ensure that clients do not incur proposed debts or a loan that they cannot repay.
  118. 118. Our goal is to assist clients in accessing financing to achieve their business dreams and create prosperity for their families and communities.</li></li></ul><li>Eligibility ACCION USA Basic Loan Requirements<br /><ul><li>Loans are for business purposes only
  119. 119. Social Security Number or ITIN
  120. 120. All required business licenses and permits
  121. 121. Commitment to the business
  122. 122. Credit history that shows responsible financial behavior
  123. 123. Cash flow that can comfortably support a monthly loan payment  </li></li></ul><li>                       <br />You aren't signed in     Sign In    Help<br />Search <br /><ul><li>Search       
  124. 124. · Everyone's Uploads
  125. 125. Groups
  126. 126. Flickr Members
  127. 127. For a Location
  128. 128. Applications
  129. 129. Home
  130. 130. The Tour
  131. 131. Sign Up
  132. 132. Explore       
  133. 133. Explore Page
  134. 134. Last 7 Days Interesting
  135. 135. Popular Tags
  136. 136. Calendar
  137. 137. Most Recent Uploads
  138. 138. Video on Flickr
  139. 139. Galleries
  140. 140. Explore Analog
  141. 141. Flickr Clock
  142. 142. Getty Images</li></ul>World Map<br /><ul><li>Places</li></ul>The Commons<br /><ul><li>Creative Commons</li></ul>FlickrBlog<br /><ul><li>
  143. 143. The App Garden
  144. 144. Camera Finder
  145. 145. Upload</li></ul>Photo / All sizes<br />Eligibility ACCION USA Basic Loan Requirements<br />To be eligible for a loan, a client must fulfill ALL of the following <br />requirements:<br /><ul><li>Have a credit score of 575 or more
  146. 146. Have not declared bankruptcy in the past 12 months or foreclosure in the past 24 months
  147. 147. Have not had any late rent or mortgage payments in the past 12 months,
  148. 148. Be up-to-date on all bills
  149. 149. Not have more than $3,000 in past due debt, generally acquired under emergency circumstances (such as layoff or illness)
  150. 150. Exhibit steady cash flow and the ability to support monthly loan payments
  151. 151. Be able to provide a cosigner, if needed </li></ul>Looking for the HTML code and photo file link? Check out this FAQ. <br />   Bookmark on Delicious<br /><ul><li>You
  152. 152. Sign in
  153. 153. Create Your Free Account
  154. 154. Explore
  155. 155. Places
  156. 156. Last 7 Days
  157. 157. This Month
  158. 158. Popular Tags
  159. 159. The Commons
  160. 160. Creative Commons
  161. 161. Search
  162. 162. Help
  163. 163. Community Guidelines
  164. 164. The Help Forum
  165. 165. FAQ
  166. 166. Sitemap
  167. 167. Get Help
  168. 168. Flickr Blog
  169. 169. About Flickr
  170. 170. Terms of Use
  171. 171. Your Privacy
  172. 172. Copyright/IP Policy
  173. 173. Report Abuse
  174. 174.                
  175. 175. Deutsch
  176. 176. English
  177. 177. Español
  178. 178. Français
  179. 179.        
  180. 180. Italiano
  181. 181. Português
  182. 182. Tiếng Việt
  183. 183. Bahasa Indonesia</li></ul>Copyright © 2011 Yahoo! Inc. All rights reserved. <br />
  184. 184. Eligibility <br />Automatic Disqualifiers<br />Automatic Disqualifiers: <br /><ul><li>Credit score less than 575
  185. 185. Late on rent or mortgage in last 12 months
  186. 186. Unpaid judgments, liens, collections accounts, or past due accounts above $3,000
  187. 187. Bankruptcy in last 12 months
  188. 188. Foreclosure or short-sell in last 2 years
  189. 189. Paying mortgages on more than 3 properties
  190. 190. Adjustable rate mortgages (ARM) adjusting during the term of the loan</li></li></ul><li>Eligibility Mortgage Guidelines<br /><ul><li>Borrowers cannot have a negative amortization or pick-a-pay mortgages with an option of negative amortization
  191. 191. Some borrowers with adjustable rate mortgages (ARM) can be considered if terms adjust at least 12 months after the ACCION USA loan term matures
  192. 192. Borrowers with interest-only mortgages are considered if they have strong cash flow</li></li></ul><li>Eligibility <br />Ineligible Industries<br />The following entities are not eligible for ACCION USA loans: <br /><ul><li>Other lenders
  193. 193. Non-profit organizations (unless they have non-grant revenue)
  194. 194. Adult entertainment, firearms, real estate, and other related industries
  195. 195. Multi-level marketing except Mary Kay and Avon
  196. 196. Higher risk, but still considered: General Contractors, Transportation, Manufacturing, Arts, and Import/Export</li></li></ul><li>Eligibility Required Documentation<br /><ul><li>3 months of personal & business bank statements
  197. 197. 2 forms of government-issued ID
  198. 198. All necessary permits and licenses
  199. 199. Detailed description of how loan money will be used in the business
  200. 200. Most recent utility bill from home and business
  201. 201. Personal and landlord references
  202. 202. Profit and loss statements and last two years of tax returns are required for loans above $10,000</li></li></ul><li>EligibilityCo-signers<br /><ul><li>A co-signer is someone who guarantees that the loan will be paid if the borrower defaults on the loan.
  203. 203. ACCION USA requires a co-signer  for start-up businesses, transition businesses, and some established businesses.
  204. 204. Co-signer must submit an application for credit check, and provide basic identification and income documentation. The automatic disqualifiers and cash flow guidelines apply to co-signers.</li></li></ul><li>EligibilityCo-signer Requirements and Substitutions<br /><ul><li>18 years old
  205. 205. Minimum of 6 months of consistent, reliable employment
  206. 206. Not a co-owner of the business
  207. 207. Submit proof of income or recent year’s tax records (if business owner)
  208. 208. Borrowers with established businesses can substitute co-signer qualification by choosing to pay a 5% nonrefundable fee upon disbursal
  209. 209. If a co-signer is not required, providing one will lower the interest rate by 2%</li></li></ul><li>Loan Application Process<br />
  210. 210. Loan Application ProcessStart-Up Business versus Established Business<br /><ul><li>There are different qualifications for assisting a newly started business versus an established business.</li></li></ul><li>Loan Application ProcessStart-Up Business – Background Information<br />Entrepreneurs with six months of revenue-generating operations that are not yet profitable must meet the basic qualifications and all of the following requirements:<br />Possess an outside income source<br />Secure a co-signer<br />Assemble a market analysis plan and 12 months of financial projections<br />Have a sufficient cash cushion to fund losses until cash flow break-even point<br />
  211. 211. Loan Application Process – Start-Up Business Let’s Get Started: Example<br />Entrepreneur: Rose Montini<br />Business: Handbag Designer and Manufacturer<br />Time in Business: 6 months<br />Requested Loan Amount: $10,000<br />Purpose: Inventory and Marketing<br />
  212. 212. Loan Application Process – Start-Up Business STEPS 1 & 2: General Questions<br /><ul><li>The general questionnaire will ask preliminary questions regarding the client’s personal finances.
  213. 213. Personal Credit Information
  214. 214. Mortgage details
  215. 215. Tax and legal questions
  216. 216. Business-specific Information
  217. 217. Type of business
  218. 218. Investments
  219. 219. Profit generation</li></li></ul><li>Loan Application Process – Start-Up Business STEPS 1 & 2: Co-signers - Start-Up Business<br /><ul><li>Co-signers are required for all businesses that are not yet profitable.
  220. 220. Rose was initially unsure who could be a co-signer, but eventually thought of her brother who is a mechanic.</li></li></ul><li>Loan Application ProcessSTEPS 1 & 2: Assembling a Business Plan<br /><ul><li>She had lists of the things she needed but lacked a formal market analysis plan.
  221. 221. ACCION USA’s financial resources can assist with business planning. </li></li></ul><li>Loan Application Process – Start-Up Business STEP 2: Filling Out the Credit Application<br /><ul><li>Rose’s brother, Dominic, agreed to co-sign the loan.
  222. 222. Both the borrower and the co-signer need to fill out the credit application.
  223. 223. ACCION USA acknowledged receipt of the application and began the process of pre-qualification.</li></li></ul><li>Loan Application Process – Start-Up Business STEPS 2: Pre-Qualification<br /><ul><li>Rose and her brother were pre-qualified for a loan up to $11,000.
  224. 224. Interest rate of 11.99%</li></li></ul><li>Loan Application Process – Start-Up Business STEP 3: Interview with a Loan Consultant<br />After Rose has sent the complete loan application package, an ACCION USA loan consultant will contact the client for an interview.<br /><ul><li>The loan consultant will want to understand her background, expertise in her industry, and clarify any questions regarding her loan application. </li></ul> <br />
  225. 225. Loan Application Process – Start-Up Business STEP 4: Submit Application to Underwriter<br /><ul><li>The loan consultant will submit Rose’s application to an ACCION USA underwriter.
  226. 226. The loan consultant will represent Rose and negotiate loan details on her behalf.
  227. 227. The underwriter will analyze and give final approval on the loan. 
  228. 228. If declined, the loan consultant will explain the reason for the decline.
  229. 229. If declined, the loan consultant will help the borrower make an action plan to resolve the issues so that he/she may reapply in 3 months.</li></ul> <br />
  230. 230. Loan Application Process – Start-Up Business STEP 5: Approval and Disbursement <br /><ul><li>Rose was approved for $10,000.
  231. 231. If the loan is approved, the client must do the following to receive the loan:
  232. 232. Electronically sign the disbursement documents (sent via secure email) or sign the documents with a notary
  233. 233. Set up ACH (Automated Clearing House) on bank account for electronic funds transfer of loan payments</li></li></ul><li>Loan Application ProcessEstablished Business - Background Information <br />Some factors that influence the loan process: <br />If loan size is more than $10,000, then:<br />Borrowers must provide two most recent years of tax records.<br />Borrowers must provide profit & loss statements.<br />Active business partners (>20% shares) must apply as a co-borrower regardless of involvement.<br />Site visits are required for loans of $20,000 or more.<br />
  234. 234. Loan Application Process – Established BusinessFunding an Established Business - Example<br /> <br />Michael Killian<br />Business: Restaurant<br />Time in Business: 5 years<br />Requested Loan Amount: $30,000<br />Purpose: Update restaurant with new kitchen equipment, furniture, and signage.<br />
  235. 235. Loan Application Process – Established BusinessSTEPS 1 & 2: General Questions and Pre-Approval<br />Michael owns an established business. Therefore, the pre-approval process should go smoothly.<br />Michael has been prequalified for a $30,000 loan. <br /><ul><li>He can now begin submitting documents to support a loan application.</li></li></ul><li>Loan Application Process – Established BusinessSTEP 3: Loan Application<br /><ul><li> Michael is asking for a loan of </li></ul> $30,000. Therefore, more <br /> information will be required.<br /><ul><li>ACCION analyzes the client’s cash flow to determine whether he or she can afford the monthly loan payments.
  236. 236. Loan consultants will work with </li></ul> borrowers to:<br /><ul><li>Examine sales versus expenses
  237. 237. Review business and personal bank statements, internal records and/or tax returns</li></li></ul><li>Loan Application Process – Established BusinessSTEP 3: Loan Application – Credit Worthiness<br />ACME Paper Supplies<br />856-423-9300 <br />Goya Foods<br />856-936-2711<br /><ul><li>ACCION USA looks at the highest non-mortgage line of credit to help determine the loan amount. Michael’s highest amount is $10,000.
  238. 238. Examples of non-mortgage lines of credit:
  239. 239. credit accounts with business suppliers.
  240. 240. credit card statements verifying a larger lending limit.
  241. 241. Outside credit references not on the borrower’s credit report can be used to verify information.</li></li></ul><li>Loan Application Process – Established BusinessSTEPS 4 & 5: The Approval Process - Important Qualifications <br /><ul><li>Business partners with >20% interest must be a co-borrower and meet the same qualifications as the primary applicant.
  242. 242. Must provide proof of all necessary operational licenses and certificates.
  243. 243. Limited credit history can be strengthened by proof of other credit lines, such as suppliers.
  244. 244. Income statements must show a 2:1 coverage.
  245. 245. Since all the above qualifications were met, Michael was approved for a $30,000 loan at 11.99% Interest.</li></li></ul><li>Loan Products<br /><ul><li>Start-up Businesses that have been operating for more than 6 months, but are not yet profitable, can qualify for a loan up to $30,000
  246. 246. Transitional Businesses can seek loans for the purchase of an existing business or change of business locationfor up to $30,000
  247. 247. Established Businesses that are both profitable and have existed for more than 6 months can qualify for a loan up to $50,000</li></li></ul><li>Loan Products: Rates<br /><ul><li>Interest rates vary between 8.99% and 15.99%
  248. 248. Closing fees vary between 3% and 6%
  249. 249. $30 application fee for disbursed loans
  250. 250. No pre-payment penalty</li></li></ul><li>Loan Products: Terms<br />The term of the loan depends on the loan amount and loan purpose (these are approximations - final terms are based on individual client needs and circumstances):<br /> <br />
  251. 251. Additional ServicesResources for Small Businesses<br /><ul><li>Business training and technical assistance
  252. 252. ACCION USA’s website has a variety of financial education resources including articles, worksheets and online webinars to help our clients help themselves. </li></ul><br />
  253. 253. Additional ServicesFinancial Education Resources<br /><ul><li> Learn more about building and maintaining good credit with ACCION USA's interactive E-Learning course!
  254. 254. The online course will walk you through the basics of reading a credit report, managing credit, and improving credit if it has been damaged.
  255. 255. Play out different scenarios by answering questions throughout the course to see how much you know about credit, and learn what works best in various situations. </li></ul>Take the Credit E-Learning course<br />Access it at in the “Managing Credit” section of the website<br />
  256. 256. Additional ServicesDebt Consolidation<br /><ul><li>Consolidations must pay off the entire balance of the chosen account and the account may be closed.
  257. 257. Revolving Debt: up to $10,000 if debt has a higher interest than an ACCION USA loan. Only one credit card may be refinanced per loan.
  258. 258. Formal Business Loan:up to $20,000 if the loan has a higher interest rate than an ACCION USA loan.</li></li></ul><li>Additional ServicesResources<br />Online loan application:<br /><br />Financial Education Resources:<br /><br />
  259. 259. Case Examples<br />Let’s <br />Practice!<br />
  260. 260. Question 1: Alejandro Let's Practice!<br />Alejandro Diaz has a used clothing sales business that has eight months in operation and is not yet profitable. <br /> Alejandro is aware of the co-signer requirement. Which of the following individuals would make the best co-signer?<br />His cousin who is also a partner in the business.<br />His actively employed aunt. <br />His uncle who is currently unemployed and living with Michael’s grandmother.<br />
  261. 261. Question 1: AlejandroLet's Practice!<br />If You Chose #1: His cousin who is also a co-owner of the business.<br />Not the best choice…<br />The co-signer needs to be someone outside of the business. The cousin will already be required to sign on as a co-borrower.<br />If You Chose #3: His unemployed uncle who is currently living with Alejandro’s grandmother.<br />Not the best choice…<br />Co-signers must demonstrate that they have the capability to cover the loan payment should the borrower be unable to pay. Additionally, co-signers must be able to demonstrate a minimum of 6 months of stable employment.<br />
  262. 262. Question 1: Alejandro Let's Practice!<br /> If You Chose #2: His actively employed aunt. <br /> This is the best choice!<br /> Alejandro’s actively employed aunt could be an ideal candidate to serve as a co-signer on this loan. <br />
  263. 263. Question 2: AlejandroLet's Practice!<br />Alejandro hasn’t created a formal business plan for his used clothing sales business. What are his options? <br />Business plans are unnecessary for small businesses.<br />Create a list of reasons for which he wants the money and how he will use it.<br />Utilize ACCION USA’s online resources to craft a business plan.<br />
  264. 264. Question 2: AlejandroLet's Practice!<br />If You Chose #1: Business plans are unnecessary for small businesses.<br />Not the best choice…<br />Business plans play an important role in the documents necessary to gain an approval for a loan. <br />If You Chose #2: Create a list of reasons for which he wants the money and how he will use it.<br />Not the best choice…<br />This is a good start, but what Alejandro needs to do is assemble a business plan.<br />
  265. 265. Question 2: AlejandroLet's Practice!<br /> If You Chose #3: Utilize ACCION USA’s online resources to craft a business plan.<br /> This is the best choice!<br /> This is an important document that ACCION USA will want to see prior to approving the loan. ACCION USA’s online resources are very helpful for new borrowers.<br />  <br />
  266. 266. Question 1: EmekaLet’s Practice!<br />Emeka owns a phone accessory business and would like to purchase more inventory before the holiday season to expand his business.<br /><ul><li>Emeka’s business has been operating for four years.
  267. 267. He has two partners in the business and each of the partners owns an equal share in the business.
  268. 268. The loan is for $12,000.
  269. 269. The business’s monthly cash flow has been inconsistent.</li></li></ul><li>Question 1: EmekaLet’s Practice!<br />Emeka has two cousins who are co-owners in the business. Who must apply?<br />Only Emeka, as long as he securitizes the loan. <br />Emeka and one cousin, because only one co-borrower is required.<br />Emeka and both cousins.<br />
  270. 270. Question 1: EmekaLet’s Practice!<br />If You Chose #1: Only Emeka as long as he securitizes the loan. <br />Not the best choice…<br />Since the business is established, Emeka does not require a co-signer to securitize the loan. Any partner in the business who owns 20% or more must apply.<br />If You Chose #2: Emeka and one cousin, because only one co-borrower is required.<br />Not the best choice……<br />ACCION USA stipulates that all partners with more than a 20% interest must apply as a co-borrower. There is no limit to the number of co-borrowers.<br />
  271. 271. Question 1: EmekaLet’s Practice!<br />If You Chose #3: Emeka and both cousins.<br />This is the right choice!<br />Since each cousin owns 1/3 of the business, they must each apply as co-borrowers and meet all of the credit qualifications.<br />
  272. 272. Question 2: EmekaLet’s Practice!<br />Emeka’s business has had cash flow issues. Revenue and expenses have been inconsistent and the business has reported a loss in certain months. Can he get the loan?<br />He has no chance. Cash flow must be spotless.<br />Yes, if he can demonstrate a current 2:1 ratio of covering the monthly loan payment.<br />
  273. 273. Question 2: EmekaLet’s Practice!<br />If You Chose #1: He has no chance. Cash flow must be spotless.<br />Not the best choice…<br /><ul><li>An income statement, which is reviewed by loan officers, will evaluate the cash flow situation.
  274. 274. Cash flow is only one of the components in evaluating the ability to repay the loan. </li></li></ul><li>Knowledge Check<br />True or False?<br />Co-signers are not required to formally apply and have their credit reviewed.<br />
  275. 275. Knowledge Check<br />Which of the following will automatically disqualify potential borrowers from receiving an ACCION USA loan?<br />A. Credit Score of less than 575<br />B. Late payment on rent or mortgage in last 12 months<br />C. An adjustable rate mortgage (ARM) that will adjust during the term of the loan<br />D. All of the above will disqualify potential borrowers<br />
  276. 276. Knowledge Check<br />What is the first step you will take with your borrower?<br />A. Examine financial documents for credit worthiness<br />B. Prepare a business plan and financial projections<br />C. Complete the first page of the loan application to determine if borrower is eligible for a loan<br />
  277. 277. Knowledge Check<br />How many days does a borrower have to submit their documentation before they will need to reapply?<br />30<br />45<br />60<br />90<br />
  278. 278. Congratulations! <br />Now you are ready to begin ACCION USA community outreach!<br />