microloansmicroloans via the via the internetinternet

Vision and missionVision 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

HISTORYHISTORY

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 THE US ACCION NETWORK

IN THE USAIN THE USAACCION

International

New England

ACCION Chicago

ACCION New Mexico

ACCION New York

ACCION San Diego

ACCION Texas

LICENSEES

BRANCHES AND DIRECT

LENDING

Atlanta Miami InternetPuerto

Rico

ACCION USA

LICENSEES/DIRECT LICENSEES/DIRECT LENDINGLENDING 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 PRODUCTS AND SERVICESSERVICES

• 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: Results of the network: 12/31/200612/31/2006• $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 traditionalChallenges to traditionalmodelmodel• 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 INNOVATION: INTERNET LENDINGLENDING

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

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 INNOVATION: INTERNET LENDINGLENDING

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 INNOVATION: INTERNET LENDINGLENDING

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

INNOVATION: INTERNET INNOVATION: INTERNET LENDINGLENDING

ACCION USAACCION USA

THANK YOU!

Visit us at:Visit us at: www.accionusa.orgwww.accionusa.org