What's on the minds of microfinance lenders
April 24, 2017 10:00 PM
Microfinance lenders focus on the customers that many banks don't want — yet. By paying attention to what's on the minds of executives working in this sector, bankers can get some insight into this untapped market.
We asked microfinance organizations around the country — all of them founding members of Credit Builders Alliance — about the challenges they face, what they wish banks would do differently, and even what they are reading. Here are some of their responses.
We asked microfinance organizations around the country — all of them founding members of Credit Builders Alliance — about the challenges they face, what they wish banks would do differently, and even what they are reading. Here are some of their responses.
Robert Boyle
Founder and chief executive
Justine Petersen
St. Louis
Founded in: 1997
Total lending in 2016: $13 million
Number of clients: 1,361
Serves Missouri, Kansas and Illinois, targeting underserved microbusinesses and consumers with an emphasis on credit building
Biggest issue for the microfinance sector: New fintech players
"The advent of online lending may be the single most formidable threat to responsible micro lending. Its omnipresence is plaguelike, and it's oftentimes cavalier lending equates to a Wild West when it comes to accountability."
Justine Petersen
St. Louis
Founded in: 1997
Total lending in 2016: $13 million
Number of clients: 1,361
Serves Missouri, Kansas and Illinois, targeting underserved microbusinesses and consumers with an emphasis on credit building
Biggest issue for the microfinance sector: New fintech players
"The advent of online lending may be the single most formidable threat to responsible micro lending. Its omnipresence is plaguelike, and it's oftentimes cavalier lending equates to a Wild West when it comes to accountability."
Lakota Vogel
Executive director
Four Bands Community Fund
Cheyenne River Indian Reservation at Eagle Butte, S.D.
Founded in: 2000
Total lending in 2016: $1,582,530
Number of clients: 690
Offers small-business lending, entrepreneurship education and financial literacy
On the wish list: More bank partnerships
"I wish banks were more familiar with the Community Development Financial Institution industry as a whole. In Native American communities, mainstream financial institutions rarely exist. Native CDFIs have responded to the need, going from certifying two in 2001 to having over 70 currently certified. I wish banks understood the demand that exists and more importantly that CDFIs are partners in those regions."
Four Bands Community Fund
Cheyenne River Indian Reservation at Eagle Butte, S.D.
Founded in: 2000
Total lending in 2016: $1,582,530
Number of clients: 690
Offers small-business lending, entrepreneurship education and financial literacy
On the wish list: More bank partnerships
"I wish banks were more familiar with the Community Development Financial Institution industry as a whole. In Native American communities, mainstream financial institutions rarely exist. Native CDFIs have responded to the need, going from certifying two in 2001 to having over 70 currently certified. I wish banks understood the demand that exists and more importantly that CDFIs are partners in those regions."
Rob Smith
Executive director
Rocky Mountain MicroFinance Institute
Denver
Founded in: 2008
Total lending in 2016: $78,965
Number of clients: 32
Helps creates economic and social mobility through entrepreneurship
Hottest microfinance trend: A focus on skills development for entrepreneurs
"While not necessarily a sexy concept, this trend is fundamental to the long-term success of our industry and for the individuals and communities we originally committed to serve."
Rocky Mountain MicroFinance Institute
Denver
Founded in: 2008
Total lending in 2016: $78,965
Number of clients: 32
Helps creates economic and social mobility through entrepreneurship
Hottest microfinance trend: A focus on skills development for entrepreneurs
"While not necessarily a sexy concept, this trend is fundamental to the long-term success of our industry and for the individuals and communities we originally committed to serve."
Yanki Tshering
Executive director
Business Center for New Americans
New York City
Founded in: 1997
Total lending in 2016: $2.3 million
Number of clients: 670
Helps refugees, immigrants and women obtain microloans to start or expand a business
Biggest microfinance misconception: That these programs are relevant only for low-income communities in developing countries
"As the income disparity increases in the developed countries, we need them more than ever."
Business Center for New Americans
New York City
Founded in: 1997
Total lending in 2016: $2.3 million
Number of clients: 670
Helps refugees, immigrants and women obtain microloans to start or expand a business
Biggest microfinance misconception: That these programs are relevant only for low-income communities in developing countries
"As the income disparity increases in the developed countries, we need them more than ever."
Anne Haines
President and chief executive
Accion New Mexico
Albuquerque
Founded in: 1994
Total lending in 2016: $21.5 million
Number of clients: 3,089
Serves Arizona, Colorado, Nevada, New Mexico and Texas
On microloan borrowers:
"Underemployment or income volatility is an impetus for many people to pursue entrepreneurship as a means of generating additional income. In this way, entrepreneurship is a vital pathway to financial stability and economic mobility."
Accion New Mexico
Albuquerque
Founded in: 1994
Total lending in 2016: $21.5 million
Number of clients: 3,089
Serves Arizona, Colorado, Nevada, New Mexico and Texas
On microloan borrowers:
"Underemployment or income volatility is an impetus for many people to pursue entrepreneurship as a means of generating additional income. In this way, entrepreneurship is a vital pathway to financial stability and economic mobility."
David Daly
Director
Maui Economic Opportunity's Business Development Center
Maui, Hawaii
Founded in: 1996
Total lending in 2016: $36,500
Number of clients: 591
Provides microfinancing to Maui County residents who want to start or expand a business but are unable to get a traditional loan
On the wish list: For local banks to develop products to help those with no credit history or bad credit become part of the financial mainstream
"Create an out-of-the-box underwriting matrix to be able to include more with flexible risk analysis."
Maui Economic Opportunity's Business Development Center
Maui, Hawaii
Founded in: 1996
Total lending in 2016: $36,500
Number of clients: 591
Provides microfinancing to Maui County residents who want to start or expand a business but are unable to get a traditional loan
On the wish list: For local banks to develop products to help those with no credit history or bad credit become part of the financial mainstream
"Create an out-of-the-box underwriting matrix to be able to include more with flexible risk analysis."
Inna Kinney
Founder and chief executive
Economic and Community Development Institute
Columbus, Ohio
Founded in: 2004
Total lending in 2016: $36 million
Number of clients: More than 1,000
Offers U.S. Small Business Administration loans statewide and is the SBA's third largest microlender
Biggest challenge: The need for capital and operating support
"Federal support is under pressure and we must look at other avenues of support."
Economic and Community Development Institute
Columbus, Ohio
Founded in: 2004
Total lending in 2016: $36 million
Number of clients: More than 1,000
Offers U.S. Small Business Administration loans statewide and is the SBA's third largest microlender
Biggest challenge: The need for capital and operating support
"Federal support is under pressure and we must look at other avenues of support."
Carol Lighthall
Executive director
Community Capital of Vermont
Barre, Vt.
Founded in: 1995
Total lending in 2016: $1.5 million
Number of clients: 61
Provides flexible financing for microbusinesses and lower-income entrepreneurs in its home state
Currently reading: "Overcoming the Five Dysfunctions of a Team," by Patrick Lencioni
"The title is terrible, but it's a great book and a positive read on team dynamics and seeing team members' strengths and weaknesses as different sides to the same coin. This also may relate to how we see our borrowers — not sure yet."
Community Capital of Vermont
Barre, Vt.
Founded in: 1995
Total lending in 2016: $1.5 million
Number of clients: 61
Provides flexible financing for microbusinesses and lower-income entrepreneurs in its home state
Currently reading: "Overcoming the Five Dysfunctions of a Team," by Patrick Lencioni
"The title is terrible, but it's a great book and a positive read on team dynamics and seeing team members' strengths and weaknesses as different sides to the same coin. This also may relate to how we see our borrowers — not sure yet."
STEPHANIE ARAIZA - Opening of th
Beto Yarce
Executive director
Ventures
Seattle
Founded in: 1995
Total lending in 2016: $61,950
Number of clients: 793
Fosters small-business ownership among low-income individuals through training and access to capital
If he could be a bank CEO for a day:
"I would hire loan officers who would look at more than just assets and credit scores when making lending decisions. There are so many examples of people who do not meet the increasingly stringent lending criteria."
Ventures
Seattle
Founded in: 1995
Total lending in 2016: $61,950
Number of clients: 793
Fosters small-business ownership among low-income individuals through training and access to capital
If he could be a bank CEO for a day:
"I would hire loan officers who would look at more than just assets and credit scores when making lending decisions. There are so many examples of people who do not meet the increasingly stringent lending criteria."
Kevin Pyle
Cindy Logsdon
Chief compliance and finance officer
Citizen Potawatomi Community Development Corp.
Shawnee, Okla.
Founded in: 2003
Total Lending in 2016: $6.2 million
Number of clients: 958
Focuses on Native Americans in Oklahoma with services such as training and capital for businesses and small-dollar loans for employees
Biggest microfinance misconception: That small loans are easier for lenders to do than large ones
"Just as much, if not more, time and effort goes into educating borrowers and underwriting and processing small-dollar loans."
Citizen Potawatomi Community Development Corp.
Shawnee, Okla.
Founded in: 2003
Total Lending in 2016: $6.2 million
Number of clients: 958
Focuses on Native Americans in Oklahoma with services such as training and capital for businesses and small-dollar loans for employees
Biggest microfinance misconception: That small loans are easier for lenders to do than large ones
"Just as much, if not more, time and effort goes into educating borrowers and underwriting and processing small-dollar loans."
