microloans via the internet
Vision and mission
VISION
To PROVIDE ECONOMIC OPPORTUNITIES FOR LOW AND MODERATE INCOME FAMILIES IN THE USA REGARDLESS OF THEIR PHYSICAL LOCATION.
MISSION TO PROVIDE UNDER AND UNBANKED FAMILIES ACCESS TO FAIR-PRICED FINANCIAL SERVICES
HISTORY
1991 – Pilot Program of ACCION New York
1994 – Additional Licensees Started in Chicago, San Antonio, Albuquerque and San Diego
2000- ACCION USA Created to Lead ACCION’S Efforts in the USA. 2000 – 2002 Three Branch Offices of ACCION USA Opened in Atlanta, Boston y Miami
2006 – First Internet Loans Approved
THE US ACCION NETWORK IN THE USA
ACCION International LICENSEES
ACCION USA
BRANCHES AND DIRECT LENDING
ACCION Chicago
ACCION New Mexico
ACCION New York New England ACCION San Diego Atlanta Miami Internet
Puerto Rico
ACCION Texas
LICENSEES/DIRECT LENDING BRANCHES:
Massachusetts, Rhode Island, Atlanta, Miami
LICENSEES– Chicago, New Mexico, New York, San Diego, Texas
Via el Internet – Arizona, Colorado, Connecticut, District of Columbia, Indiana, Kentucky, Louisiana, Maryland, Maine, Michigan, Mississippi, Missouri, New Jersey, Nevada, North Carolina Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington, and Wisconsin
PRODUCTS AND SERVICES
• Term Microloans from $500 - $25,000 up to 48
Months
• Lines of Credit
• Credit Builder Loans (Immigrants)
• Financial Literacy Program “ Your Money and
You”
Results of the network: 12/31/2006
• $179,000,000 Loaned to 18,167 Clients in
29,000 Loans: Average $7,400
• Outstanding Loan Portfolio: $45,000,000 to
6,021 Clients
• Historical Loss Rate: 7.3%
• Financial Self-Sufficiency Varies from 30% to
80%
• 325 Loans Approved/Month
• 45% Women; 90% Minorities
Challenges to traditional model
• Licensees/Branch Offices Have High Fixed Costs
• Traditional Lending Model is “High Touch”
• Average Cost Per $ Loaned is $0.48
• Interest Rates Are Regulated; Financial Margins
Are Low (8- 10%)
• Self-Sufficiency Difficult; Requires Subsidy.
• Expansion to New Cities is Labor Intensive
INNOVATION: INTERNET LENDING
OBJECTIVE: Make Low Cost Loans to Clients Regardless of Physical Location. REQUIRED CHANGES TO MODEL:
• • • • •
New Design for Web Page in English/Spanish New Marketing Strategies New Software to Take Loan Applications Online Centralised Loan Service Center in Boston New Form of Loan Disbursement Using Notary or Electronic Signature
INNOVATION: INTERNET LENDING
LENDING PROCESS:
• Client Completes Loan Application Online • Loan Officer in Service Center Reviews Application • Loan Officer Calls Client for Additional
Information/clarification
• • • •
Loan is Declined or Approved and Disbursed Follow Up Survey is Sent to Client Automatic Payment Debit Collections Calls as Necessary
INNOVATION: INTERNET LENDING
RESULTS TO DATE:
• Program Started in March, 2006 • 234 Loans for Total of $1.6 Million; Average
Loan Size $6,791
• 215 Loans Outstanding for Total of $1.06 Million • Loans Made in 35 States
• Portfolio at Risk: 6% ( same as all Loans)
• Cost Per $ Loaned: $0.37
INNOVATION: INTERNET LENDING
IMPLICATIONS/LESSONS LEARNED
• Board of Directors and Stakeholders Must be
Educated on New Approach
• Traditional “Truths” Must be Challenged
• New Forms of “Loyalty” Among Clients Must be
Developed
• Outreach and Marketing to Clients is Different
ACCION USA
THANK YOU!
Visit us at: www.accionusa.org