Microlending, crowfunding, & alternative financial tools giovannitti
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The document discusses microlending and alternative financial tools for underserved communities in West Virginia. It describes a collaborative of Community Development Financial Institutions (CDFIs) and alternative lenders in WV that provide loans to areas with high poverty rates. The goals of the collaborative are to understand the lending landscape, map loan data to see lending activity, and facilitate peer learning. Members have found that referrals and educating bankers are important, and see potential for continued growth of community lenders in the state.
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Microlending, crowfunding, & alternative financial tools giovannitti
- 1. Microlending, Crowdfunding, & Alternative Financial Tools for Underserved Entrepreneurs and Communities Jen Giovannitti Regional Community Development Manager Federal Reserve Bank of Richmond https://www.richmondfed.org/community_development June 4, 2014
- 2. The views expressed in this presentation do not necessarily reflect the views of the Federal Reserve Bank of Richmond or the Federal Reserve System. DISCLAIMER
- 3. 3 West Virginia Loan Fund Collaborative Peer group of CDFIs and alternative lenders THE WV LOAN FUND COLLABORATIVE GROUP First Microloan of West Virginia Kanawha Institute for Social Action and Research (KISRA) Mid-Ohio Valley Regional Council (MOVRC) Natural Capital Investment Fund (NCIF) New River Gorge Development Authority (NRGDA) Washington County Council on Economic Development Woodlands Community Lenders WV Center for Rural Health Wyoming County Economic Development Authority (WCEDA)
- 4. 4 Serving Underserved Areas: WV Alternative Lenders L L L L L L L L Randolph Hardy Kanawha GreenbrierFayette Grant Preston Raleigh Pocahontas Boone Clay Nicholas Wayne Roane Logan Pendleton Mingo Lewis Braxton Webster Ritchie Mason Wood Tucker Monroe Lincoln Hampshire Mercer Wirt Jackson Tyler McDowell Wetzel Wyoming Gilmer Harrison Upshur Marion Putnam Mineral Cabell Barbour Summers Marshall Berkeley Calhoun Monongalia Doddridge Morgan Taylor Ohio Jefferson Pleasants Brooke Hancock The Center for Rural Health Development, Inc. Wyoming County Loan Fund New River Gorge Regional Development Authority Woodlands Community Lenders Poverty Rate by County (2012) 25.1% - 36% 20.1% - 25% 18.1% - 20% 16% - 18% 10.8% - 15.9% L Lending Organizations Washington County Council on Economic Development Natural Capital Investment Fund Mid Ohio Valley Regional Council Source: U.S. Census Bureau, Small Area Income and Poverty Estimates Kanawha Institute For Social Research & Action, Inc. WV 18% U.S. 15.9%
- 5. 5 Goals of the Collaborative 1. Understand the lending landscape 2. Map data 3. Develop opportunities for peer-to-peer learning
- 6. Mapping Outcome • Loans amounts mapping • Activity of the individual Loan funds 6
- 7. 7 What Have We Learned • Money is not the biggest challenge • Referral Networks are Crucial • Educating Bankers on How to Partner is Important • The Future Looks Bright for Community Lenders
- 8. 8 Next Steps 2012 2014 • Updating mapping • Looking to include 2 additional funds • Bringing additional content learning to the group • Writing an issue for one of the Bank’s publications on the topic • Learning the Landscape • First mapping • Charting the issues
- 9. Thank You Jen Giovannitti, Regional Community Development Manager Jen.giovannitti@rich.frb.org 1-804-697-8778
Editor's Notes
- As Sandy mentioned, we have been convening a peer group of CDFIs and alternative lenders (community loan funds) over the past 3 years to develop data around their lending patterns. I’m going to take a moment to share more of the details around this project because it illustrates some useful information about micro lending.
- The WV Loan Fund Collaborative is a multi-year pilot project that the Federal Reserve Bank initiated with two local partners – WV HUB and Claude Worthington Benedum Foundation. The project entailed convening WV loan funds to discuss their lending activity, operational challenges, key partners, and such things as their aspirations for future growth and development. This map shows both the 2012 poverty rates in WV and the HQ locations of the loan funds that have been participating in the collaborative.
- We really set out on a learning mission with this pilot project. The idea was to better understand who is lending where, how long they had been in operation, if they were planning to expand, etc. WV is a small state but as you could see on the previous slide there is a lot of opportunity to direct lending into poor and underserved rural areas. As the group continued to meet, it became clear that developing some combined activity mapping would be a way to inform the group of how their lending looked at a state level. This entailed using point in time data (ie. open loans on their books at a point in time). The mapping was not expected to be totally accurate but rather a starting point to see generally how the loans were spread out across the state. The other key goal was professional relationship building and peer-sharing. This is something that the Federal Reserve Bank has found to be an useful and practical outcome of hosting forums where people can engage in deep discussions around issues. In this case, the discussions around lending obstacles, fundraising, building referral networks and many other loan fund issues, lend to closer professional relationships among the loan fund managers.
- The maps offered a new way to look at the alternative lending landscape and visually see patterns. For example, based on the 2012 maps, the most popular lending amounts were in the range of $2,500 - $15,000 and $15,000-$50,000. These loan amounts are in the small loan and microloan range. Likewise, the maps showed that there were small business loans in all reaches of the state, which was a surprisingly expansive coverage of loans despite West Virginia’s challenging topography and very low population density in regions. Within the loan activity maps, two strong areas for small business loans emerged visually, which were around the City of Beckley and the Mid-Ohio River Valley. This patterns was discussed by the WVLFC as an offshoot of the combined Developing this unique set of mapping for the alternative lenders in West Virginia was instrumental in discussing the complexities of alternative lending and moving into a more detailed discussion of capacity issues.