Posts filed under ‘United States’
New Orleans: A Developing Country in America?
by Rebecca Corey, KF 9 & 16, New Orleans, USA
“This isn’t America. New Orleans is like a developing country.”
In the four weeks I’ve lived in New Orleans, I’ve heard this statement from nearly ten different people.
(…)
So if the United States is a developed country, then why does Kiva have a presence here? Once a country is considered “developed” (modernized, industrialized, democratized, capitalized), then people want to wipe their hands, pat each other on the back, and say the work is done. Institutionalized greed and inequality are given the leeway to exist, because we become convinced we have achieved development and reached an endpoint. The action is completed. Stasis reached. Shouldn’t we be satisfied? By bringing Kiva City to the United States, Kiva has made a brave statement about what development means and who can benefit from it.
Continue Reading 14 October 2011 at 15:42 Rebecca Corey 6 comments
A New Look at Need: Microfinance From Tanzania to New Orleans
by Rebecca Corey, KF16, New Orleans, USA
In 2009 when I told friends and family I was moving to Tanzania to study international development and to work for Kiva in the field of microfinance, or the furnishing of small loans to the working poor, we all had certain pre-formed ideas about how impactful and necessary my work was sure to be. We understood that in terms of GDP, literacy, infant mortality, and other common measures, Tanzania is a “developing” country, Third World, periphery. In another word: poor. As a recent college graduate, I had established ideas about poverty. It is there as opposed to here, it happens to the Other or them, not to me or mine, and so on. Therefore, a $200 loan for the purchase of a few goats to a thin, ebony-skinned woman with a brightly patterned cloth turbaned around her head made sense; it fit into my worldview, my idea of the face of poverty. The same held true for the fishmongers, the roadside bicycle repair men, and the juice vendors whose loans I helped process and post to the Kiva website. Oh yes, I knew there was poverty in the United States, but a part of me believed that for Americans, it was different. Better. Safer. More comfortable. And who in the U.S. didn’t have access to credit? I was sure that an entrepreneur with a solid business plan would find it relatively easy to acquire working capital.
But already, Kiva was challenging preconceived notions about poverty and microfinance. At training in San Francisco in 2009, I learned that the leaders of the young organization had decided to start funding loans in the United States. There was immediate backlash. A lending group was formed protesting the decision. Articles were written denouncing the move. But Kiva posted the first U.S. loans, and they were funded almost immediately.
Continue Reading 1 October 2011 at 08:00 Rebecca Corey 5 comments
Part 3: Borrower protection practices at Kiva partners
About a month ago, it seemed like all I heard about was clients’ denied loans, or who got loans significantly smaller than what they needed. At the time, I was concerned about how many people weren’t getting the finances they asked for. Then I heard about the suicides in India and was glad to know that the Kiva partner where I’m stationed carefully considers how much to lend each client.
Continue Reading 13 February 2011 at 12:00 Bridget 1 comment
Business Education in South Texas
By Bridget Lewis, KF13, USA
“What makes us different from a bank or other lenders? We want to be a sounding board, and we want to walk with our client at all stages of their business life cycle. I don’t want you to come and leave, I want you to come and stay, and build community.”
Happy Holidays from ACCION Texas-Louisiana
So far, I’ve spent my whole fellowship in ACCION Texas-Louisiana HQ in San Antonio. But, as the name implies, there’s a lot more to ACCION than this office. So I recently decided to take a road trip and visit some of the other offices. I visited Louisiana and a few of the offices in Texas.
I also asked someone at each office to say a little something to the Kiva community. Here’s what they had to say. Unfortunately, I had a few technical difficulties with the video so the sound isn’t quite synced.
Happy Holidays, and thank you!
Bridget Lewis is a Kiva Fellow at ACCION Texas-Louisiana in San Antonio, Texas. To help drive economic development in Texas and Louisiana, join the ACCION Texas-Louisiana lending team!
Road tripping the lone star state
So far, I’ve spent my whole fellowship in ACCION Texas-Louisiana HQ in San Antonio. But, as the name implies, there’s a lot more to ACCION than this office. So I recently decided to take a road trip and visit some of the other offices. I visited Louisiana and blogged about it, and a few offices in Texas.
Here’s the Texas portion of my trip.
Dallas and Fort Worth
The Dallas office is the second most populous office. They have two Loan Officers and two Loan Processors, as well as a Vice President for North Texas Operations. The Fort Worth office is much newer, and only has one person there full time. It’s kind of hard to find (they’re on the second story of a large mall) but much more centrally located than most other offices.
Rod Douglas, the operations VP here, is responsible for loan production in North Texas, for working with the partners, and eventually for marketing and fundraising. As I’ve mentioned before, ACCION relies on donations to complete their budget, and marketing is a big challenge. The San Antonio office is excellent at raising funds – thanks primarily to the efforts of the VP of Development, Kay Simpson, and Janie Barrera, the founding president and CEO. But as an office gets larger, the need for a local presence and community investment grows.
That’s where Rod comes in. He was a banker for 30 years before serving as development director for a school in East Dallas for five years. Janie, in looking to fill this position, had many candidates with a financial background, but not with fundraising experience as well. A mutual friend said she knew someone just like that, and Rod joined the ACCION team in August.
George Cerna, one of the loan officers in Dallas, talked to me about the importance of the social and cultural parts of the job. George said you “want to develop a rapport with people. Especially in West Dallas. The Hispanic community is less trusting of others and they should be. So you can’t just hand out a business card. You have to get to know that person. … People aren’t looking for a handout; they’re just looking for a little assistance right now. …We always give hope, even when we have to turn down a loan.”
Me and the ladies of Fort Worth
Leticia Gutierrez, a Loan Processor, said that the personality of the Loan Officers is important for that reason. “Mayra (the Fort Worth Loan Officer) has a very good relationship with all of our clients. She builds that rapport so the client will continue to come back to ACCION….I can tell you that in my opinion, the key in this line of work is great customer service and a passion for what we do. Those two combinations can guarantee the client will be happy and you will enjoy what it is we do. “
Houston (North & West)
Houston is a two-office city, because the greater Houston area is almost 6 million people. Bridget Ross, the Loan Officer for the Houston North office, said she thinks the metropolitan area could easily take a third Loan Officer; “there’s that big of a need.”
Houston, like all ACCION offices, gets clients from all walks of life. One of the biggest challenges Houston’s clients face, though, is credit problems. That’s one reason that Ismenia Fletcher, the Hispanic Markets Manager, says microfinance organizations are so important; “people have to start or re-build their credit history. It’s not just for people with a little taqueria who want to grow it bigger, but people who… have the capacity to pay back, but don’t have credit history.”
Shirley Brooks, the Regional Director here, said that some clients get involved in damaging credit situations “because they think they have no other options. We are the other option.”
Bridget states that one frustration is people who come to her after they’ve spent all their money. “People come and say ‘if I had money I wouldn’t be coming to you.’ That’s the wrong way of going about it. It’s always better to use a lender’s money… it helps you leverage your capital, because lenders then see that you have something to fall back on if you hit a crisis…and then you build a relationship with the lender. …If you come to us before the crisis, we can help you more – not just with capital, but with resources too.”
Financial Literacy
One of the other major challenges for clients is financial literacy. As Shirley puts it; “just because they know how to do work… like fix cars, doesn’t mean they know how to run a business. … How should you price your work? How do you balance your financials?”
That’s why financial education is so important. As Shirley said; “credit without education is junk.” ACCION provides that education in a variety of ways.
Throughout an application, the ACCION officer gives guidance to the applicant on their potential to get a loan and on what they can do to improve their credit. Sarah Kuntz, the Community Outreach Coordinator, said “One client told me ‘Oh, I didn’t know why I was rejected by such and such a bank, but now I understand that.’ … Someone else told me ‘I’m so happy; this is the first time … I’ve signed a legal document where I really know what I’m signing.’ …It’s definitely a lot of education. A lot of people don’t know what credit is, how credit works, that they have to separate their business and personal finances, that they can’t be overextended in debt…”
If someone wants more detailed financial or credit coaching, ACCION refers them to one of their partners who specialize in exactly that, usually for free. In Houston, those partners are Money Management International, Credit Coalition, and Family Services of Greater Houston.
In Houston and New Orleans there is one more tool to improve financial literacy: the IDA program. This is a program that provides business training and a support network for clients who own or are starting a business. They get expert mentors, who are retired business owners themselves. The program also encourages a saving culture by matching savings, thanks to a partnership with Capital One. This is the first business IDA program, at least in Texas, and it’s currently in its second year. The program was created by a partnership of ACCION Texas-Louisiana, Money Management International, SCORE, with support from the African American Chamber of Commerce of Greater Houston. It was funded by Capital One.
Celebrating a birthday at the office
I think Bridget expressed the impact of that knowledge best. She told me that she’s “passionate for people in business because it’s a faith walk. …People come in totally discouraged but leave encouraged, even though I had to turn down their loan application, at this time. You can’t put a price on that… They know they make better decisions with information.”
And that help is appreciated. Sarah told me “I think that’s because people really appreciate that we gave them an opportunity when no one believed in them. I think that’s why they keep coming back to ACCION.”
Bridget Lewis is a Kiva Fellow at ACCION Texas-Louisiana in San Antonio, Texas. To help drive economic development in Texas and Louisiana, join the ACCION Texas-Louisiana lending team!
Road tripping in Alligator country
By Bridget Lewis, KF13, Texas USA.
So far, I’ve spent my whole fellowship in ACCION Texas-Louisiana HQ in San Antonio. But, as the name implies, there’s a lot more to ACCION than this office. So I recently decided to take a road trip and visit some of the other offices. …Here’s the Louisiana portion of my trip, in reverse order; New Orleans, Baton Rouge, Alexandria, and Shreveport.
Continue Reading 16 December 2010 at 12:00 Bridget 1 comment
Growing services, not profit
By Bridget Lewis, KF13, Texas USA.
I loved the opportunity to meet the entirety of the ACCION Texas-Louisiana staff. Considering ACCION Texas-Louisiana is the largest microfinance organization in the US, I was expecting a big crowd. So I was surprised to learn that they do everything with less than 70 people! And they do a lot. … As Janie Barrera, founding president of ACCION Texas-Louisiana said; “We’re the biggest and the best. But that doesn’t mean we can sit on our laurels.”
Continue Reading 19 November 2010 at 08:00 Bridget 1 comment
You’re going to Texas??
“Microfinance in the US isn’t about poverty, it’s about creating opportunity – about economic development.” And it’s clear that ACCION Texas-Louisiana supports economic development here. From 1994 to 2009 their clients sustained over 4,000 jobs and created almost 2,200 new ones! Given the current worries about the US economy and its global impact, that’s a big deal.
Continue Reading 14 November 2010 at 08:00 Bridget 5 comments
Reflections on a U.S. Fellowship
By Casey Koppelson, KF12 United States & KF13 Philippines
A video of an Opportunity Fund client demonstrating how to re-shoe a horse. In some ways, Mike is your typical U.S. microfinance client.
Continue Reading 9 November 2010 at 18:37 caseykoppelson 1 comment
A U.S. Microfinance Roadtrip
By Sarah Warfield, Kiva Intern with ACCION USA
Growing up my family was big on ‘the road trip’. Every summer we would load up whatever large car we owned and we would set out on a good ol’fashioned American road trip. I’ve seen the world’s biggest prairie dog, stayed in a light house on Green bay, gotten stuck in a snow storm in New Mexico, and I can tell almost every state’s license plate from 20 feet way.
Sadly it had been a while since I’ve been on a good road trip, but now at ACCION USA as the Kiva intern I feel like I’m on a constant road trip. Everyday is a new client in a new city with a new story. It has impressed upon me that US microfinance is a giant map and every small business is another destination waiting for a visit. Plus, Kiva is now opening its doors to more US partners and the access that lenders will have to these destinations will be even greater–expanding the scope of the microfinance road trip.
Kiva Launches With a New U.S. Partner
By Casey Koppelson, KF12, United States
Last week Kiva launched a new partnership in the United States: ACCION Texas-Louisiana. How does Kiva usher in new partners? I spoke to Libby Parsons at ACCION Texas-Louisiana to find out.
Continue Reading 30 October 2010 at 00:00 caseykoppelson 1 comment
Scoping Out the Competition
By Casey Koppelson, KF12, United States
One of my side projects here at Opportunity Fund is to learn about the competition—banks, credit unions, not-for-profits, and payday lenders—and how they are advertising small loans. What sort of messages are potential clients seeing?
Continue Reading 9 October 2010 at 00:00 caseykoppelson 1 comment
Where Are the U.S. Borrowers?
By Casey Koppelson, KF12, United States
If you’re a Kiva lender hoping to make a loan in the good ol’ USA, you may have trouble finding a borrower. Because there are few of them, Kiva loans from the U.S. tend to fund quickly—within 4 or 5 days, sometimes overnight. What’s behind Kiva’s U.S. loan shortage?
Continue Reading 27 September 2010 at 16:00 caseykoppelson 6 comments
A Celebration for Savers in San Jose
By Casey Koppelson, KF12, United States
On Saturday I attended a Savers Party in San Jose. The party (complete with balloons, a DJ, and face painting) was thrown by Opportunity Fund, Kiva’s field partner in San Francisco. I spoke to a client who had earned $4,000 through the IDA Savings matching program.
Continue Reading 17 August 2010 at 08:00 caseykoppelson 3 comments
3 Different Countries, 3 Remarkably Similar Businesses
Since I started my third stint as a Kiva Fellow at Opportunity Fund, I’ve spent a lot of time thinking about the differences between microfinance in the USA (Opportunity Fund is located in the Bay Area) and microfinance in Central America (I previously worked in Nicaragua and Costa Rica). Then I met Monica, an Opportunity Fund client, and was immediately overwhelmed by how similar her business was to other businesses I saw while I was abroad.
Monica sells shoes at the Berryessa Flea Market in San Jose, California. She is using her loan to buy more merchandise so she can expand her business. Monica is proud of her business and is particularly happy that her business has enabled her to send money to her help support her parents and to pay for her sister’s education in Mexico.
What are people saying about microfinance in the US?
I hope that some of you had the pleasure of attending the Microfinance USA Conference last month in San Francisco. For the many of you who didn’t, I wanted to share a few of my favorite quotes from the event a long with a little context for each one.
“The ripple effect of these loans is the larger part of the story” – Maria Shriver, First Lady of California. Maria is vocal ally of microfinance in California and helped kick off the conference
Microfinance in the USA
It was a controversial move when Kiva approved it’s first partners serving clients in the US almost a year ago, but after just a few weeks working as a Kiva Fellow with Opportunity Fund, a Kiva Field Partner serving clients in the San Francisco Bay Area, I am convinced that it was the right decision. Not only did adding US partners attracted a new group of lenders to Kiva.org and fail to negatively impact international lending (as some predicted), but I am also incredibly impressed by the work US partners like Opportunity Fund are doing. More than 85% of small businesses that have the support of Opportunity Fund are still open 2 years after receiving the loan and Opportunity Fund clients experience a median 27% increase in business revenues.
Why I Love New York and Microfinance
From Elizabeth Bueno, Kiva Program Intern at ACCION USA, Kiva’s first Domestic Field Partner.
Although I grew up in Queens and currently live in Brooklyn, the Bronx can feel like a world away. I find this interesting, since when I was a child I would dream of going to India or another far off country to somehow help humanity. My family never understood why I would want to go to India when I come from Colombia, a country that also suffers from deep poverty and even an internal civil war. What I’ve learned, especially living in New York, is that you don’t have to go very far to make a contribution to this world. My visit to an ACCION USA client, Leopoldina, was a reminder of that fact.
As the Kiva Intern at ACCION USA, one of my duties is to visit our clients to capture video and stories to post to the Kiva Web site. After a 50-minute subway ride, I came out from underground to the ecstatic rhythm of salsa music blasting from several cars. The smell of fried food mixed with incense burning from the local restaurant to provide a rapid awakening. I followed my Google Map and made the long walk to Leopoldina’s apartment in the public housing buildings.
Leopoldina knew that I would be making a visit to capture a video for the Kiva.org website. She greeted me very warmly and professionally. In her kitchen she had laid out a black cloth that beautifully displayed her gold jewelry. It was such an energetic environment; there were loud noises and medical equipment strewn around the house. She got right down to business and explained her hard, yet inspiring path to entrepreneurship.
Leopoldina was a factory worker. Because she is the mother of a special needs daughter, she left to be a housekeeper since it would allow her flexible hours. Only later did she decide to start up her own home-based jewelry business, using a small business loan from ACCION USA to purchase her first batch of inventory. In her eight years in business, she has become very skilled at selling. Leopoldina explained that selling her jewelry is therapeutic and lifts her spirits during difficult days. I was amazed by her knowledge of the art of sales. She beamed self-reliance.
As I sat at Leopoldina’s kitchen table, I could hear the moaning sounds of her daughter in the other room, and the neighbor’s shouting. But the sound that truly resonated was the strength and determination that I heard from Leopdoldina’s voice. “Me encanta Nueva York, mucho!” ’I love New York,’ she said. I felt a deep reminder for why I love New York, a city where immigrants like she and I can meet by happenstance and realize that we are both living our dreams.
ACCION USA visits borrower Leopoldina from ACCION USA on Vimeo.
The Nature of Poverty
I’ve seen the effects of poverty in many parts of the world. A year spent in Latin America couldn’t have prepared me for the crushing poverty that I saw in India. In Jaipur- the lonesome eight year old girl with a baby strapped to her back collecting garbage along the train tracks. In Mumbai- the endless lines of street dwellers sleeping alongside the highway and the horrified starved looks on their faces. The man that used one arm to pull the small remaining portion of his body across the harsh cobblestone paths of Varanasi- I could never erase that image from my memory.
Nor can I erase the feelings from my heart after what I saw in New Orleans post- hurricane Katrina. The community was abandoned and left in shambles and the residents, after years of neglect were nearly helpless. I’m often heartbroken by the exposed and vulnerable I see on the streets of New York City- old, young, pregnant, war veterans and others just lost. When I visited my home last week, it was hard to miss the bulging crowd outside of the Denver Rescue Mission- or maybe it just looks smaller when the crowd huddles together to escape the freezing winters.
Trying to compare the destitute in San Francisco or New York City to the desolate in Katmandu or Lima would do an incredible injustice to truth of these individual situations. The nature of poverty in the United States often manifests in ways that we don’t commonly label as “poverty”, especially once compared to the destitution we see in developing countries. I can’t pinpoint it but, the look of boredom I saw yesterday on the face of a four year old girl in New York City, elicits a similar feeling from me as seeing the languish on the face of a child in India.
You cannot compare the empty stomach of a child in New Delhi to the bulging belly of a boy in Brooklyn; however the look of malaise on both of their faces can be a symptom of some form of poverty. Poverty can be due to the lack of dignity involved in the process of consumption. Over abundance and extreme lack have both been known to create hopelessness, violence, and severe health problems. The types of poverty that I distinguish have manifested themselves differently and each deserves a compassionate call to response.
How does this relate to Kiva…
The United States has been suffering from a community disconnection that has been growing for decades, and the affect has had implications across the globe. The movement to bring back our sense of community has taken many forms. Some buy locally grown foods or volunteer at local school programs. Now, you can choose to lend locally on Kiva and support small businesses that foster strong and dignified communities. I’m a firm believer in the interconnectedness of humanity, and that even the smallest of actions can have profound and long lasting impacts. By supporting a microenterprise on Kiva you are supporting the rights of an individual to a dignified way of earning a living and supporting their family- dignity is a strong word.
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Erica Dorn has recently completed her Kiva Fellowship at ACCION USA in New York City. She will be continuing a career in US Microfinance and can be reached at ericadorn@gmail.com. You can also follow her blogs related to US Microfinance at ACCIONUSA.org/blog
Microfinance through New-York-Colored Glasses
By Abby Gray, KF6/7, Togo & Senegal (now in New York)
In Dakar, this ad provoked vandals to rebel against the culturally inappropriate image. In New York, it wouldn't get a second glance.
If you have to deal with culture shock after 8 months of living in West Africa, New York is one of the most dramatic places to do it. On one hand, the vibrancy and energy of pedestrian-filled, trafficky New York streets isn’t all that different from the dusty “rues” of Dakar. Colorful fruit carts still grace the sidewalks, and overhearing conversations in foreign languages is a daily occurrence. On the other hand, skyscrapers and giant billboards of half-naked models are everywhere, as are exorbitant price tags on everything from purses to sushi dinners.
Having completed my official Kiva duties, I am now doing research at the Financial Access Initiative (FAI), a microfinance think-tank of sorts. It’s a consortium of researchers from NYU, Harvard, Yale, and Innovations for Poverty Action, focused on expanding access to quality financial services for low-income individuals. (more…)
New York City to Mexico City – Pre-Fellowship Musings
Pre-fellowship musings.
Continue Reading 13 July 2009 at 18:50 Julia Kastner 2 comments
Pissed Off Kiva Lenders
By John Briggs, KF8 Kenya
Update on sentiment shift: On June 23, Tom, the team captain for the (formerly) Pissed Off Kiva Lenders, changed the team name to Unhappy Kiva Lenders. Tom explained the name change in a posting on the team page: “I want the day to come soon when the team name will be ‘Delighted Again Kiva Lenders’ but the step above in the name change reflects current progress.”
Some Kiva lenders are pissed off about Kiva’s recent launch of loans to borrowers in the United States. Their angry cry has been heard in Kenya.
I arrived in Kenya two weeks ago to work with new Kiva field partner KADET. My marathon orientation-and-training tour is in full swing: this week I met dozens of KADET branch personnel in the western cities of Kisumu and Eldoret.
Successfully setting up Kiva-related operations poses many challenges for MFIs, but my new KADET colleagues made quick work of it. Both branches were able to post borrowers to Kiva on the same day they were introduced to it: Kisumu posted Maulyne’s loan and Eldoret posted Monicah’s loan.
Both loans were funded overnight, and the KADET staff was jubilant. At the Eldoret branch I joined KADET staff in poring over the Kiva lenders and lending teams who had supported Monicah. One lending team for Monicah’s loan jumped out at us: the Pissed Off Kiva Lenders.
Pissed off lenders? People at KADET were surprised. This wasn’t in the Kiva orientation I’d given them. Stephen Makanga, KADET’s integration and donor relations manager, and I decided to open the Pissed Off Kiva Lenders team page to find out more.
Image from the Pissed Off Kiva Lenders' team page
A statement on the page announced, “Kiva’s stated mission is to ‘alleviate poverty’. Poverty is defined as: ‘the state of having little or no money and few or no material possessions’. Does that sound more like the situation for US Kiva borrowers or borrowers from the Third World countries?”
Stephen gave the page an incredulous stare and kept reading.
Upending microcredit: Cambodians use Kiva to lend to U.S. borrowers
This Wednesday marked a watershed moment for Kiva.org: borrowers from the U.S. made a well-publicized debut on the person-to-person microlending website. It left no doubt that microcredit, seen by many as the province of the poor, had arrived to serve Americans in need.
The floodgates are open, and they sluice both ways.
Kiva’s launch of lending in the U.S. has impassioned many, including a group of people in Cambodia near and dear to me — the staff of Maxima Mikroheranvatho, a Kiva partner microfinance institution where I was a Kiva Fellow from October 2008 to February 2009.
As Kiva ambassador-in-the-trenches at Maxima, one of the things I’d tried to impress upon them was the satisfaction I get out of being a Kiva lender. So when my posting at Maxima ended earlier this year, I’d settled on the perfect gift to help them understand this: a Kiva gift certificate.
Over our farewell dinner in Phnom Penh, I pulled out a printout of the Kiva gift certificate page and presented it to the senior managers at Maxima. As they’re in the business of microlending, minor disbelief ensued. Kiva!? Who would they lend to? When I told them that Kiva was considering launching in the U.S., excitement erupted.
U.S. Microfinance 101
U.S. Microfinance 101
I hear the phrase U.S. microfinance and I perk up- I’m not alone. Last week I was at a microfinance 101 meeting in New York City. The event was catered to a group of young professionals that were interested in getting involved, somehow, in U.S. microfinance. Someone asked a question about repayment systems for U.S. microloans, wondering if borrowers come into the office to make repayments or do the loan officers go “into the field” to collect? The end goal with domestic microfinance is the same as it is internationally; empower individuals to create prosperity through entrepreneurship.
To answer her question: on occasion a borrower may come into the office to drop off their payment, or a loan consultant will do a site visit. Generally speaking in the U.S. the repayment system is electronic, a monthly debit from the borrowers bank account. This sounds less compelling than the vision of a loan officer riding the entire day on a motorcycle to a rural village to collect a five dollar repayment from a loan for a cow. But, not to worry there are definitely other aspects of appeal for domestic microfinance.
Entrepreneurs are turned away from traditional U.S. banks for many reasons, maybe because of a low credit score or no score at all. They may not have a solid business plan or have not yet acquired the appropriate permits and licenses. In many cases though, the estimated $30 million unbanked Americans simply aren’t served or don’t have access to traditional banking. Many entrepreneurs just need a few tools to help them create prosperity- microfinance institutions can provide that.
Credit scores were discussed at the microfinance meeting last week. One person pointed out that a large American bank just announced that they weren’t loaning to anyone with a credit score below 800, in other words: they aren’t lending. Microfinance institutions are lending, the largest U.S. microlender requires a credit score of just 575. U.S. microfinance institutions make loans to individuals ranging from $500- $50,000. They offer loans and other products such as financial literacy to individuals from all walks of life.
It’s very common in the U.S. to have a client walk into a microfinance institution with a bag full of tiny pieces of paper and request a loan. Traditional banks would quickly turn the client away. At an MFI, a loan consultant will sit down and go through each piece of paper to create a cash flow, help create a business plan and refer the entrepreneur to other agencies to get appropriate licensing. An MFI loan consultant will do everything they can to give the borrower the credit they need.
Domestic microfinance is in a position to begin scaling up to meet the needs of more low-medium income borrowers. Individuals from all walks of life can find themselves in need of the kinds of services a U.S. MFI can offer. Services like $500 credit builder loans, or help with creating a business plan, larger loans for business capital and inventory, and other types of financial literacy services. Microfinance provides individuals with the power to be self-sufficient and to create a legacy and life of prosperity. Domestic microfinance is playing a part in fulfilling this dream for entrepreneurs from coast-to-coast.
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Erica Dorn is a Kiva Fellow researching U.S. microfinance in New York City.
