Putting Financial Skills into Action: New FIELD Whitepaper
There’s a renewed awareness today that it’s not enough to simply be knowledgeable about financial concepts–it’s about applying that knowledge–even in simple ways. We all know that eating vegetables are good for us yet, more often than not we reach for the french fries instead. This simple scenario also holds true in the realm of financial skills. Many of us know that we need to save, budget and work on our credit score but all too often we give in to impulses and put things off until tomorrow.
This move from gains in financial knowledge toward putting these skills into practice has been termed ‘financial capability’. A commitment to building financial capability is growing amongst microenterprise organizations, as discussed by the Aspen Institute’s FIELD program’s new white paper on the topic. Microenterprise organizations like ACCION USA use financial products coupled with financial education, allowing microentrepreneurs to not just learn about managing finances, but to effectively put that knowledge into practice with a financial product.
How is ACCION USA building financial capability? ACCION USA’s small business loans, secured loans (guaranteed with the money of the applicant) and small dollar credit builder loans (for individuals with no credit history) allow microentrepreneurs to build a strong installment credit history through on-time payments over an extended period of time. Financial education on credit and other small business fundamentals is provided by AUSA staff throughout the application process and the life of a small business loan, building skills around credit management that lead to long-term financial success.
Keep your eyes peeled for new tools that are emerging to support work around financial education for microentrepreneurs, like ACCION USA’s e-learning course on credit, or other web-based training sites like assetplatform.org.
Destination: Karl’s Sausage
ACCION USA client Karl’s Sausage Kitchen & European Market is a destination for meat lovers throughout New England and beyond. On Tuesday night, it was a destination for ACCION USA staff, as some of us drove to Saugus, MA to participate in a ceremony celebrating the installation of their new business sign.
It was for the design and installation of this sign that Karl’s applied and was approved for an $18,000 loan from ACCION USA’s Samuel Adams Brewing the American Dream Fund, a partnership between ACCION USA and Samuel Adams designed to provide access to capital and mentorship for small business owners in the food, beverage and hospitality sectors. “The credit crunch and recession have really made it difficult for businesses of our type to secure a loan. We were lucky to hear about the program,” said Anita, one of the owners of Karl’s.
As we stood outside for the lighting of the new sign, a fresh and catchy look that fully maintains the Karl’s tradition, I glanced around me at the family, friends, distributors, and loyal customers that had gathered for an evening of German Sausages and celebration with the owners of Karl’s. I thought about how much the business is impacting the community, not just in the lives of their 6 employees (soon to be 7), but their neighbors, long-time customers and especially Doris, the first employee of Karl’s who has worked there since 1958. ‘It’s been my life’, said Doris when selling items at the cash register. I was tremendously proud that ACCION USA was a part of this celebration, and could be a partner in the new life and energy that Anita and her husband Bob are pouring into this landmark business.
Check out write-ups in boston.com’s business updates and the Lynn Daily. Congratulations Anita and Bob! ACCION USA is thrilled to be a part of your business journey.
Karl’s Sausage Kitchen, located at 142 Broadway (Route 1 North), is open Tuesday-Thursday from 9 a.m. to 6 p.m., Friday from 9 a.m. to 7 p.m. and Saturday from 9a.m. to 6p.m. Reach the business by phone at (781) 233-3099 or online at www.karlssausage.com.
ACCION USA Green Business Client Featured in “Entrepreneurship Interviews”
By Cailey Ryckman
Entrepreneurship Interviews, a popular blog that features interviews with real life entrepreneurs and their businesses, recently highlighted one of ACCION USA’s green loan recipients, Cheney Brand. Cheney owns the solar energy design and installment company SunBug Solar. Read more about Cheney and how he put his ACCION USA loan towards green business success.
ACCION USA Featured in a New Publication on Scale
After 3 years of exchange with our peers in the pursuit of scaling our lending, a new publication was just released by the Aspen Institute’s FIELD program. The last few years were daunting to say the least, but our periodic meetings and often heated (well, heated in a good way) discussions really allowed us to learn and encourage each other along the way (full disclosure: I co-authored the publication too).
The publication, Dollars for Dreams: Scaling Microlending in the U.S., is the culmination of all these conversations—we hope it helps other organizations in some way as they seek to grow their lending programs. Check it out!
Tags: microfinance, microlending, scale
ACCION USA Celebrates One Year on Kiva.org!
I’m not one for remembering dates; I’ll even admit that I confuse my mom and dad’s birthdays. So when June 10th was approaching, there weren’t any plans going on to celebrate the one-year anniversary for ACCION USA’s partnership with Kiva.org.
Without further ado, a blog post to commemorate the partnership!
On June 10, 2009 the first U.S. loan appeared on the Kiva website, Elizabeth Polanco. I did my best to be the first person to lend to a U.S. entrepreneur; Maria Shriver beat me to it though!
The weeks that followed ensued passionate conversation about the need for microfinance in the United States, compared to traditional Kiva partners in developing nations. A lending team on Kiva was created to support us, check out the Happy Kiva Lenders . There were also some interesting conversations going on in the blogosphere that have helped fuel more support and awareness for microfinance globally.
Since June 10, 2009, ACCION USA has raised almost $500,000 dollars to support 95 borrowers through Kiva.org. Each of these borrowers has had a chance to share their story of entrepreneurship with the lending community on Kiva. Their Kiva profiles help generate a narrative about the successes and challenges for entrepreneurs, and the need for access to small business loans.
U.S. microfinance has only reached the tip of the iceberg, so to speak. It is through partners like Kiva that we are inspired and become innovative to reach those in need. With our missions aligned, ACCION USA and Kiva will continue to grow and inspire interest in microfinance—together.
And now for the Thank You’s!
Dear Kiva lenders, we have been overwhelmed by your generosity and conviction to the mission of microfinance. Thank you for all of your support and kind words—we always look forward to hearing from you. We hope that you choose to continue supporting ACCION USA through Kiva.org.
To our clients, a sincere thank you for participating in the Kiva program—your stories are the reason that we come to work everyday!
Please take a look at our current loans fundraising on Kiva!
Tags: accion usa, kiva, kiva.org, maria shriver, microfinance, us microfinance
In David vs. Goliath, Microfinance the Slingshot
Bloomberg Businessweek has a terrific article this week about microlenders stepping in to fill the credit gap created by decreased lending to small businesses among mainstream lenders. The piece focuses on ACCION USA and Opportunity Fund, as two of the larger U.S. microlenders. 
The article pulls in great stats from the Aspen Institute, which tracked increases in U.S. microloan applications at 66% of lenders over the past two years, as well as an aggregate $68.6 million lent in 2008. (In the Tooting-our-Own-Horn Department: U.S. ACCION affiliates lent a combined $31.4 million in 2008 – or 46% of the industry total reported by the Aspen Institute.)
Growing along with demand are interest in and support for the industry. Over 700 individuals (including California First Lady Maria Shriver) attended the first national microfinance conference last month, and donations from private individuals are up.
All of this is helping to unlock the potential of the field; and more importantly, that of the small businesses it aids.
As William Ortiz-Cartagena, microfinance borrower and owner of a San Francisco parking company, put it, “It’s like David and Goliath, and Opportunity Fund is my slingshot.”
Read the full article at Businessweek.com.
ACCION USA In the Running for a $1 Million Grant
We’ve got a big secret to share. For the past three months, ACCION USA has been knee deep plotting and planning its biggest microloan marketing and awareness campaign to date. Today, we’re happy to fill you in on the details.
ACCION USA is proud to be one of eight nonprofit organizations chosen to compete for a $1 million grant in Giving Made Simple, an online voting campaign where Sam’s Club members will help choose how to direct $4 million in charitable giving. In order to get the top $1 million grant, we’ll need to get the top number of votes in the entrepreneurship category.
Giving Made Simple is challenging us to put out networks to work! We’re in the running alongside some amazing small business support organizations— the Corporation for Enterprise Development (CFED), Community Reinvestment Fund (CRF) and Kiva will all be vying for the funds—and will need each and every one of our supporters helping to spread the word about our campaign.
Here’s how to get involved:
- Sam’s Club Members: Vote! If you’re one millions of people in the U.S. that belongs to Sam’s Club, VOTE NOW and VOTE OFTEN – you can vote once a day each day through May 2. We did the math and know that we’ll need about 750,000 votes to win, and each time you vote ACCION USA brings us one step closer.
- Spread the word by donating your profile picture for a day at www.DonateProfilepicture.Org. You’ll let all of your friends know that you support ACCION USA, and will inspire others to get involved. The video gives more detials.
- Calling all student groups: We need you to use your creativity and social networks to spread the word on campus. Learn how you can win a trip for two to the Microfinance USA 2010 Conference and support AUSA’s Giving Made Simple campaign by participating in our Student Challenge. Learn more here.
We’ll keep you posted here on what we’re doing to promote the campaign and hope you’ll check back for updates!
A Second Look for Boston Small Businesses
Meeting with Boston Mayor Thomas M. Menino. Photo credit: Isabel Leon, City Hall Photographer
Last month, Boston Mayor Thomas M. Menino proposed a new ‘Second Look’ partnership between banks, ACCION USA and the City of Boston. Always a staunch supporter of small business, Mayor Menino wants to deliver to Main Street businesses the financing they need to grow, and believes that microfinance might offer part of the solution. “A sea change in lending is underway, and we can help facilitate it. Microfinance was invented for the underbanked. Now, it’s our small and medium businesses that are underbanked, and we can adapt the model for them,” the Mayor said.
Needless to say, I could not agree more.
Last Thursday I was privileged to attend a meeting with the Mayor to officially kick off his Second Look program. Together with nine of Boston’s major banking institutions, we spoke of ways to get capital into the hands of more small businesses. Through the program, businesses turned down for loans at traditional banks will be automatically referred to ACCION USA for a second look. While we all agreed that not every business is a good candidate for a loan (‘micro’ or otherwise), we also know that sending referrals to ACCION USA helps banks provide a real, tangible benefit to their customers. And it helps get credit flowing to the small businesses that will be the source of Boston’s economic recovery and prosperity.
With banks acting as a feeder system, the Second Look program represents a tremendous opportunity for ACCION USA reach hundreds – perhaps thousands – of small business owners who might never have considered that a microloan might be just what they need.
Think something like this would work in your city?
Maybe Microfinance is More about Jobs than Poverty?
There have been few articles highlighting the U.S. microfinance industry that I have enjoyed as much as the one published today by Maria Aspan in American Banker (ACCION USA Avoids Anti-Poverty Pitch – February 10, 2010). While industry critics frequently link success (or lack thereof) to the ability for microfinance institutions to alleviate poverty, Ms. Aspan, through her thoughtful interview with ACCION USA president and CEO Gina Harman, recognizes that in the U.S., microfinance isn’t the silver bullet. Ms. Aspan wrote:
“It is true that microfinance is a means of lifting people out of poverty, but it, in and of itself, will not get the job done,” Harman, the president and chief executive of the nonprofit microlender Accion USA, said in an interview last month…”I think if we cast ourselves in the language of, ‘We solve poverty,’ we become part of the big universe of antipoverty fighters, without a big, systematic, programmatic way of describing how we do so,” she said. “If microfinance is the answer to every question, we’re going to answer no questions — and that’s why I want to stay focused on small business.”
In addition, Ms. Aspan painted an accurate portrait of the spectrum of microfinance providers in the U.S., complementing Ms. Harman’s remarks with insightful comments from other industry leaders, including Stephen Vogel of Grameen America:
Stephen Vogel, Grameen America’s CEO, said by e-mail that it “focuses on providing small loans to people living at or below the poverty line. … Accion is an excellent next source of capital for our borrowers and their businesses”…
And Premal Shah of Kiva:
Premal Shah, Kiva’s president, acknowledged “a good, healthy tension” between the language of poverty and that of small business, especially as Kiva facilitates lending domestically and abroad.
“Unlike Ghana or Bangladesh … where it’s clear that the people on our Web site are coping with some form of poverty,” marketing is trickier in this country “because of the wealth, because there are small businesses that still can’t get loans from banks,” Shah said. “We have to be more thoughtful in the United States, because the U.S. microfinance sector serves a broader range of clients.”
So, then, what is microfinance about if not directly alleviating poverty? Frankly, in today’s unemployment-plagued economy microlenders like ACCION USA are focused on one impact indicator: job creation. Each loan we provide helps to create or save nearly 2.5 jobs—that’s 2.5 people that could have gone from lower-income to no-income in a heartbeat. Moreover, these jobs are relatively higher paying (compared to the national minimum wage) and sustainable (as over 98% of our borrowers’ businesses survive).
I’d be interested in hearing from someone who could argue that that’s not success.
Please Mr. President, More Support for Microloans
“The true engine of job creation in this country will always be America’s businesses,” said President Obama in last night’s State of the Union address.
While I couldn’t agree more, I wished that the President drew increased focus to America’s microbusinesses — the “mom-and-pop” establishments (typically with fewer than five employees) that are the lifeblood of communities nationwide. These are the businesses that start when “an entrepreneur takes a chance on a dream, or [when] a worker decides its time she became her own boss.”
Mom-and-pop microbusinseses are the true drivers of job creation.
Eighty-seven percent of all American businesses are, in fact, microbusinesses, which represent 18 percent of all U.S. private employment (according to the Association for Enterprise Opportunity). These are the businesses that have proven to support job creation in previous economic downturns, and will be the businesses that guide America out of the current recession.
President Obama’s pledge of $30 billion in funding to help community development banks get critical capital into the hands of small business owners is a step in the right direction for American microbusinesses. It will be a bigger, stronger step in the right direction if microlenders like ACCION USA are included as part of the solution along with community banks. We are ready, and a proven path to deploy loans to deserving business across the country.
Regardless, the President’s commitment to small businesses was abundantly clear, and the importance of ACCION USA’s work with small businesses in good and bad economic times was reinforced. We’ll renew our focus on getting more attention in Washington for microlending programs, and remain committed to the small businesses we serve.