Banner Biz QandA

4/1/2010, 11:12 a.m.

If it looks like the borrower is a strong applicant, he or she will start working with a loan consultant one-on-one to gather additional information and documents. Credit-building education and resources are provided along the way. After we receive all of the information we need, decisions are made within five business days. Most times, the loan application process takes around 2 to 3 weeks.

Q: How do ACCION staff evaluate the prospects for success of the small enterprises which they finance?

A: At ACCION USA, we evaluate each business individually. Typically, we look at a business owner’s personal credit history and the business’s profit and loss statements, balance sheets and business plan, as well as personal references. We also analyze the competitive advantage of the business.

Q: What is ACCION’s record of success?  What is the loss rate?

A: Since 1991, ACCION USA has provided over 19,000 microloans totaling over $120 million — and historically, 90 percent of these loans have been repaid. Our most recent study indicates that our impact extends far beyond the loan — 98 percent of existing businesses that receive ACCION USA loans remain open, and each loan recipient creates or retains 2.4 jobs in his or her community.

Q: What are the principal criteria for granting a loan?

A: Business loan applications are analyzed based on an individual’s credit history and ability to repay the loan and their experience in the industry.  Experience in the industry is not just evaluated in years in operating the business but also through the relationships built with one’s community, industry suppliers and key business stakeholders.  Generally, we ask that borrowers meet the following basic requirements:

• A credit score of at least 575, no bankruptcy in the past 12 months and no foreclosure in the past 24 months;

• Applicant must not own more than three properties, and must be current on rent or mortgage obligations and not have any missed payments in the past 12 months;

• There must be no more than $3,000 in past-due debt.

Q: What percentage of loans are made to African American businesses, and is there any program to increase that number?

A: At ACCION USA, we recognize that while minority-owned microenterprises continue to be a growing force in our local and national economies, their owners are disproportionately affected by the lack of access to capital.  

For nearly two decades, ACCION USA has been on a mission to fill this credit gap, working predominantly with minority populations in the U.S. Currently, our active clients in New England are 85 percent minority, with 58 percent Hispanic/Latino and 27 percent African American.  We estimate that approximately 90 percent of all our clients fall below the low- to moderate-income threshold.