Takin’ it to the Web: Online Microbusinesses Thrive in Recession
Dan and his self-designed greeting cards
Dan is certainly no stranger to the internet’s powerful reach—his social media savvy shows, even though he claims to be a novice. His greeting card company, iZon, was started at his dining room table, and has expanded beyond his wildest expectations. Now he is planning to bring his business into the internet age with a new website and marketing campaign.
Internet-based businesses in ACCION USA’s portfolio have been performing extremely well lately, largely because they have low overhead. Freed from the obligation of rent, they have fewer financial burdens to manage in the event that sales take a turn for the worse due to the recession. Joshua, for example, runs his vintage clothing business solely on the internet. Instead of investing capital in rent for a storefront, he sells his handpicked items online.
The economy may or may not be on the path to recovery, but it’s clear that jobs will keep dropping for a while longer. This means that more and more budding entrepreneurs are seeing the recession as an opportunity to go into business for themselves. While ACCION USA provides vital financial services to this population of entrepreneurs, the internet provides a low-cost marketplace for their ideas.
Though online businesses may not be the first thought that comes to mind when thinking of the typical microfinance borrower, I know I’m definitely curious to see if the internet becomes a more common marketplace for microbusinesses over the next few years. Business presence on the web may also become a metric for social impact as we work with our entrepreneurs to develop cost-saving solutions to doing business.
Top Four Reasons Why I’m Going To SOCAP 09
I can think of over a hundred reasons to attend the SOCAP conference in San Francisco September 1-3, 2009.
What is SOCAP 09?
SOCAP (Social Capital Markets) “brings together a unique mix of the world’s top social innovators, investors, donors, entrepreneurs, and thought-leaders, today’s leading catalysts of change from across the globe. [to] celebrate the renewed will and determination of these pioneers investing for social impact.”
The top four reasons why I’m attending…
- YOLA.com ACCION USA is partnering with Yola.com, a company that provides free web building and hosting tools. We are excited to bring technology and marketing tools to the microentrepreneurs that we serve. SOCAP is a chance to discuss this exciting new partnership.
- KIVA.org ACCION USA is in its third month of its pioneering partnership with Kiva.org, which speaks to the innovation that ACCION USA is bringing to the domestic microfinance industry. As the former Kiva fellow and current Kiva coordinator at ACCION USA, I am excited to hear Premal Shah speak about the future of social innovation on the web and Chelsa Bocci discuss Kiva’s community outreach initiatives.
- Sonal Shah from the White House’s office on Social Innovation is the keynote speaker and will be addressing the government’s new socially minded strategy to “effectively streamline government towards investing in what works.” This one speaks for itself.
- Day 3 Keynote: “An aspirational look at the future of our economy and society at large. Focusing on lessons learned outside of western society and the holistic nature of blended value ventures.” Bringing blended values to socially minded business sounds like a song to me and is a perspective that deserves considerable discussion.
I am looking forward to the opportunity to engage and learn from the list of over 100 speakers on panel discussions ranging from “Social Media That Moves People to Action” to “Alternative Financial Services for the Unbanked.” Check out the complete list. I look forward to my return to NYC after the conference as ACCION USA continues to expand and grow, generating innovative ideas and continuing to provide fresh products and services to our clients.
Tags: accion usa, chelsa bocci, erica dorn, kiva, premal shah, SOCAP 09
What Makes an Entrepreneur an Entrepreneur?
ACCION USA borrower Frederick at his emissions testing center.
“The driving need isn’t different, and the dreams aren’t different, and the final outcomes may be influenced by different factors, but in essence [U.S. and international borrowers] aren’t different,” said Gina Harman, ACCION USA’s CEO, shortly before the organization formed its groundbreaking partnership with Kiva, regarded primarily for its work in the developing world. She stressed the importance of conveying what a massive change small business ownership can mean for a client – “it’s about the human desire to provide, and the devotion to doing whatever has to be done to make it work.”
Her words describe exactly what I’ve been experiencing for the last few weeks, as I meet with clients and hear stories revealing their drive for success. I know if I had a business idea that my local bank didn’t seem to believe in enough to give me a loan, I would probably just resign myself to thinking it was harebrained in the first place and call it a day. ACCION USA borrowers do just the opposite—when they are turned down by a bank, they come to us instead.
Just last week I spoke with Frederick, an ACCION USA borrower who had tired of working for government agencies as a fire inspector and dreamed of starting his own emissions inspection business. After he told me he was turned down by a bank before he came to ACCION USA, I asked him why he was so devoted to starting his own business.
“What makes you happy?” I asked him.
“Giving others the best service I can,” he said. “I knew I couldn’t do that unless I was working for myself.”
How often do we complain about our lack of professional fulfillment without attempting to do something about it? When people like Frederick share their stories and express the devotion with which they tackle, as Gina said, “whatever has to be done,” it should make us all reflect on the choices we have to pursue our own ambitions.
Elise Tosun has a background in economics and has worked on designing financial products for farmers in India and for a microfinance investment fund in New York. She is currently the Kiva Program Intern at ACCION USA.
Tags: accion, accion usa, elise tosun, entrepreneurship, gina harman, kiva, kiva.org, us microfinance
A Mainstreet Microfinance Mission
On one of my very first missions as a Kiva Fellow, I wandered through a maze of food cart vendors searching for a borrower. A newbie to the profession, I thought his address would be enough to locate him to take a the photo needed for his profile. As anyone who has ever tried to find anything in a developing country, region, or neighborhood will tell you, I needed much more than just an address. I was surrounded by food carts in all directions, slinging everything from fruit and pretzels to dumplings and falafel. Where was I? Not in India, or Kenya, or Guatemala. No, I was in downtown Manhattan.
As a Kiva Fellow for ACCION USA, I learned that New York borrowers were more similar to international borrowers than not. If 75% of ACCION USA’s borrowers are immigrants, it’s even possible that some of them could have been microloan borrowers in their home country before applying at ACCION USA!
Perhaps one of the most revolutionary aspects of ACCION USA’s jump into the person-to-person lending market is just that: the divide between Kiva lenders and borrowers has grown much smaller. As one Kiva/ACCION USA lender recently conveyed to me, her son was inspired by Ray’s business in Atlanta. Her son receives his allowance in Kiva cash, and he is an avid lender. Seeing a successful small business being built closer to home has inspired him, and has made the other business he sees around the world that much more real and respected.
My last attempt to contact the elusive food cart borrower landed me at a hot dog cart smack dab in the spot where my guy had been 10 minutes prior. I decided to strike up conversation with his replacement.
“So where are you from?” I asked.
“Bangladesh,” he said- sounded like music to my ears. I bought the quintessential NYC treat from him, as we chatted about Muhammad Yunus and the American dream. We both concluded that New York City is an incredible and magical city. I couldn’t have asked for a better end to my Kiva mission – to learn that microentrepreneurs here in the U.S. are as inspiring and resourceful as those in the developing world.
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Erica Dorn served as Kiva’s first domestic Fellow, she now coordinates the Kiva program at ACCION USA. Learn more about Erica’s U.S. microlending adventures at Vimeo.
Tags: accion, accion usa, erica dorn, kiva, kiva.org, microfinance, Muhammad Yunus, us microfinance, Yunus
A Microentrepreneur Walks Into a Community Lending Organization…
This could sound like the start of a bad microfinance industry joke, but in all seriousness, I have a question to ask. A small business owner is in need of a loan. Let’s say it’s the owner of a childcare business that’s located in a house on the outskirts of town. The business, the sole source of income for the owner and her husband, recently unemployed, is in peril of shutting down. She needs just enough money to repair her toilet, so that the childcare center can meet basic health codes. The business is the woman’s life, and provides her with so much pride.
The business is located in Pakistan. Would you lend $25 to this woman?
The business is located in Lawrence, Massachusetts. Would you lend $25 to this woman?
Regardless of your decision in each scenario, my point should be clear: the face of microenterprise in the United States is not remarkably different from microfinance abroad. While microfinance organizations (MFIs) like ACCION USA may make larger loans than its international counterparts and operates in a formal economy, our common mission is to empower people through access to capital at a fair price, provide the tools needed to build a sustainable business and therefore employment, income, pride of ownership and of community.
So why, then, should U.S. and international MFI’s not be united under a common platform such as Kiva? Lack of financial education and consistent employment opportunities in low income communities are primary reasons that people cannot break out of poverty. Microfinance has effectively addressed these issues in the U.S. by educating borrowers and supporting businesses that provide self-employment opportunity, family income and much-needed jobs.
At ACCION USA, we support Kiva’s work in the United States— where poverty is a real, measurable problem. Millions of families nationwide are marginalized, without access to adequate health, educational, and financial resources. Likewise, millions of business owners cannot access traditional or fairly priced credit. Thanks to Kiva, many more entrepreneurs will become aware of MFIs and their life-changing loans . Kiva represents a huge step in reaching scale in the U.S.
Tags: kiva
Thank You, Unhappy Kiva Lenders
One of my all-time favorite pieces of wisdom is that you can please some of the people some of the time, but you can’t please all of the people all of the time. I’ve never found this statement to be truer recently, as a healthy debate regarding whether Kiva has any business providing loans to microentrepreneurs in the U.S. has picked up speed.
An online poll shows that Kiva has pleased exactly 48 percent of the people by giving U.S. entrepreneurs the opportunity to raise loan funds on their site—leaving 52 percent unsure or unsupportive of the move. Comments criticizing the U.S. loans range from good (Lenders aren’t being forced to lend to U.S.-based businesses) to bad (U.S. loans displace loans from the poorest nations) to downright ugly (“Why can’t U.S. business owners can just go to a bank?”).
Regardless of your stance on U.S. microfinance, the facts presented in Kiva’s most recent Community Call highlight the positive effect that the domestic launch has had on microfinance and microentrepreneurs worldwide:
- The U.S. pilot contributed to an 18 percent increase in new money on the site, distributed to small business owners worldwide—increasing the money available to the poorest nations that Kiva works in.
- U.S. focused lenders also made loans to entrepreneurs in developing countries—disproving a popular belief that featuring U.S. entrepreneurs would siphon money away from those most in need.
- U.S. loans are in the top third in terms of funding rates, and all have funded within 18 days—proving that there is enough support to sustain the U.S. lending operation, with room for growth.
To those still unconvinced that lending to U.S. entrepreneurs is a worthy $25 investment, I encourage you to become educated on U.S. microfinance before making your decision. And to those “Unhappy Kiva Lenders”—thanks for getting involved in the debate. Your passion is driving a conversation that is bringing unprecedented attention to the U.S. side of microfinance—perhaps some local entrepreneurs will gain access to capital because of it.
Tags: kiva, unhappy kiva lenders
Martinis and Microlending: Get Involved with ACCION USA’s Microfinance Council
I love microfinance, especially the U.S. variety. And I love people that love microfinance—all varieties. That’s why I’m a big fan of the ACCION USA Microfinance Council, who co-hosted a great “bLENDer” event last night to celebrate ACCION USA’s Kiva partnership launch.
I’m plugging the Council because they provide great way for microfinance enthusiasts in the New York City area to get involved in the industry in a meaningful way. Aside from their always-crowded happy hours, the group hosts high profile speakers (including an upcoming event with Congresswoman Nydia Velasquez), and provides a myriad of volunteer opportunities. Volunteers are currently working directly with AUSA staff members on projects ranging from product development and new market expansion to translations and Website development.
Check out the group on AUSA’s Website, where there’s info on upcoming volunteer projects and how to join. If you do, get in touch—I’ll buy you a drink at their next happy hour!
Tags: bLENDer, kiva, Microfinance Council, volunteering
Microfinance for the Masses: ACCION USA Announces Partnership wtih Kiva.org
I’m not good at keeping secrets. That’s why I’m so excited to share a huge piece of ACCION USA news that we’ve had to keep quiet until now. ACCION USA been chosen as one of two field partners to join Kiva.org, the world’s first person-to-person microlending Website, in its pilot expansion to the United States.
Lenders from around the world can now lend online to entrepreneurs in the United States for a financial commitment as small as $25. ACCION USA’s 15 borrowers are already getting “funded” fast, and we’ll be adding new borrowers to the site everyday.
Kiva is an organization that’s truly bringing microfinance to Main Street, and as a leading U.S. microlender, ACCION USA is thrilled to be part of the pilot program. Kiva’s 500,000 lenders provide microfinance institutions (MFIs) like ACCION USA with capital at zero cost and zero risk, decreasing cost to the MFI and expanding the amount of dollars available to small businesses shut out of the financial mainstream.
The news broke at 8:30 this morning on a Good Morning America segment featuring Kiva’s president Premal Shah—we’re confident that many of America’s 10 million microbusinesses now know that microloan resources are available to help their operations grow.
ACCION USA is encouraging supporters to get involved with Kiva by making a loan to an ACCION USA borrower, donating directly to ACCION USA to help support Kiva-related lending activities, and learning more on our Website.
We’ll keep you updated on the launch and partnership this week—there will certainly be more news to share. But for now, there’s $25 burning a hole in my pocket and a few small business owners who could use it on Kiva.org…
Tags: good morning america, kiva, launch, premal shah