HomeMy WebLinkAboutExhibit 2Accion U.S.A. Scope and Funding Request
ACCU N
USA
Executive Summary
A pioneer and recognized leader of the domestic microfinance field, ACCION USA (AUSA) is
dedicated to improving the lives of low and moderate -income individuals in the United States by
providing credit and other financial services. We aim to empower self-employed individuals, or
microentrepreneurs', to increase family incomes, create jobs and revitalize economically
disenfranchised communities by providing "micro" loans (between $500 and $25,000) and access
to business education services.
The City of Miami, through a multifaceted and innovative partnership with AUSA, helps to
ensure that hundreds of low- to moderate -income microentrepreneurs in the City of Miami
receive the credit and business training assistance they need. Over the past three years, your
support:
• Facilitated the growth of AUSA into the largest microlender in Florida — AUSA's Miami
program has quickly become the fastest growing microlending program in domestic
microfinance history by disbursing $3.65 million in over 766 loans in southern Florida to
date, of which $1.25 million in 258 loans were disbursed to businesses in the City of Miami.
Despite their scant resources, our borrowers have repaid their loans at a rate of 96%.
• Helped to strengthen our local Advisory Board - As a member of our Advisory Board, Willy
Porro provides insightful guidance and support to our program, helping AUSA to remain on
the leading edge of small business financing.
Leveraged additional fundir — As a founding funder of our program, support provided by
the City of Miami helped AUSA to leverage additional funding from a wide array of sources
including individuals, family foundations, corporate foundations, banks and other public
entities. %
Having accomplished our goal to establish a thriving program in Miami, we now turn to the City
for continued support to reach hundreds of low- to moderate -income microentrepreneurs still in
need of our assistance, especially within the ever-growing immigrant populations located
throughout the City.
We respectfully request $200,000 for a twelve-month project period to deepen our reach in
Miami's low-income communities. Specifically, through the launch of a multi -pronged, targeted
outreach campaign (detailed below) we aim to increase our disbursements within the City limits
from 33% of total disbursement to 40% during the project year. In other words, your support will
facilitate the disbursement of nearly $800,000 million in 160 Loans in the City of Miami - 40% of
the $2 million in 400 loans that we aim to disburse in southern Florida through year-end 2007.
Organization Background
History and Accomplishments
In 2003, AUSA began to provide services to disadvantaged microentrepreneurs in Miami -Dade
through the opening of our Miami program office in East Little Havana. AUSA today is the
largest microlender in Florida with an outstanding portfolio of over $1.6 million and 346 active
clients, as of 7/31/2006:
1 Business owners with five employees or less.
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AUSA is recognized as a leader in the field of microenterprise. Some of the key factors
contributing to our success include:
• Strong Track Record— Launched in early 2003, AUSA's Miami program has quickly become
the fastest growing microlending program in domestic microfinance history.
• Increasing Sustainability — AUSA's broad financial and community support is a testament to
the enormous potential of microlending — a poverty alleviation strategy with the capacity to
be sustainable over the long-term. Each year, our direct revenue covers an increasingly larger
percentage of our program costs, helping AUSA to become a permanent resource for the low
to moderate -income individuals we serve. In 2005, 30% of our total costs in Miami were
covered by direct revenue.
• Ability to Innovate— We are continually improving our mode], reaching greater scale and
efficiency. AUSA's loan processing center enables us to achieve economies of scale by
centralizing various loan processing tasks. This enables our program staff in Miami to focus
more on outreach and ]ending rather than paperwork and data entry.
• Collaborative Partnerships — In Miami, AUSA makes a concerted effort to build partnerships
with all of the organizations in the area that come into contact with our target population
including, social services providers, community organizations, training providers, the SBA
and banks.
Current Services
AUSA specializes in microenterprise loans, with loans ranging from $500 - $25,000. The average
size of loans disbursed in southern Florida is $4,800. The terms of our loans range from three to
sixty months. We disburse loans to low-income individuals without an established credit history,
business start-ups and existing businessbusinesA that lack access to traditional bank credit. To better
serve Miami's Latino and Haitian populations we have multilingual staff and all of our marketing
collateral is available in English, Spanish and Haitian Creole.
Client Profile
Our clients in Miami are 71% Latino, 11% Haitian/West Indian and 5% African American. 95%
are low- to moderate- income as defined by HUD 80% guidelines and over 80% have recently
immigrated to the United States. 38% of our borrowers are women. While we provide loans to
microentrepreneurs throughout Miami Dade, we focus our outreach in several low-income
communities including East Little Havana, Little Haiti, Overtown, Allapattah, Hialeah, West
Coconut Grove, Opa Locka and Southwest Miami. Notably, AUSA is the only microlender
serving Miami's Haitian population.
Impact
The following chart summarizes AUSA impact in the City of Miami during the past three years:
ACCION USA - Miami Impact Analysis 4/2003-7/2006
Overall Program Cit _of Miami
Lending Stets
Loans disbursed 761 258
$ disbursed 3,863,798 1,250,000
Impact
Jobs created 148 42
Full time jobs 102 26
30-40 hours/week 22 7
Part time 24 9
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Accion U.S.A. Scope and Funding Request
Jobs retained 328 138
Full time jobs 260 112
30-40 hours/week 49 22
Part time 19 4
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uSA .. _.
In addition to these indicators, a recent client survey suggests that AUSA makes a significant
impact in the revitalization of Miami's disadvantaged communities through small business
development. After receiving AUSA loans, 46% of survey respondents reported an increase in
business assets, 17% reported an increase in business sales and 17% reported an increase in take-
home pay. Qualitative results from a longitudinal impact study entitled Measuring Client Success,
revealed that ACCION loans contribute to the viability of entrepreneurship as a positive
alternative to poor quality, low -paying, or unsatisfying jobs or, in some cases, public assistance.
In a recent landmark publication about the impact of the domestic microenterprise field, the
Aspen Institute, through an extensive review of existing research, concludes that microenterprise
programs can indeed play an important role in the revitalization of local economies.2
Entrepreneurship plays a vital role in local economies through job creation. Studies of
microenterprises indicate that each business generates about 1.5 jobs; equating to the retention of
locally generated profits and wealth distribution. In a five year study of low-income
entrepreneurs, 53% of those individuals who received assistance from microenterprise programs
were able to move above the poverty line.
Yet, the financial and economic impact of our program is only part of our story. Aside from these
indicators AUSA makes a difference through the`tbllowing:
A Client like Talmadge Frazier: Access to credi'l'land financial literacy tools remains elusive for
many low -to -moderate income individuals throughout Miami. Take the case of Talmadge Frazier,
an Overtown resident, aspiring community leader and St. Louis -style barbeque master. Frazier
has severe dyslexia and went through his share of hard knocks in life. Talmadge simply stopped
running his business last year when he crashed his food trailer. He didn't have sufficient money
to apply for new City business licenses or repair his trailer. With a troubled past credit history and
the small scale of his business, a bank's small business loan was never an option. Through work
the Overtown Youth Center, ACCION met Talmadge and was able to approve him for a special
loan/grant program we piloted in Overtown. The program augmented AUSA's business loans
with a matching equity investment. The combined loan/equity investment of $3500 put "Brother
Frazier's" trailer back in action. ACCION clients like Frazier illustrate the power of microcredit
on many levels: it impacts individuals and families, the local economy, and leadership potential.
Building Basic Financial Skills: ACCION has also begun to develop new products and services.
For most low-income individuals, the path to financial independence is blocked not only by a lack
of access to credit but also by a lack of financial literacy. In 2005 we launched "Your Money and
You" Financial Literacy Toolkit and recently began testing it Miami. This bilingual program was
created to support low- and moderate -income individuals who are interested in starting or
expanding businesses and who wish to improve their money -management skills and business
acumen. It offers practical financial strategies and advice to English- and Spanish-speaking
participants in four areas: money management, credit, business taxes and insurance, and the
2 Elaine Edgecomb and Joyce Klein. Opening Opportunities, Building Ownership: Fulfilling the Promise of
Microenterprise in the United States, FIELD (The Fund for Innovation, Effectiveness, Learning and
Dissemination) of the Aspen Institute, 2005.
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fundamentals of small business operation. We've already begun to see favorable results using
this curriculum - after just 2 workshops, we have already trained 80 people.
First Step for New Immigrants: ACCION works in diverse communities throughout Miami —
from Overtown and Little Haiti to Little Havana, the West Grove and South Miami. Because
Miami is such a tremendous gateway of new immigrants coming from Latin America and the
Caribbean, AUSA is often a first step to establishing a business credit history. Our staffs ability
to speak English, Spanish and Haitian Creole has allowed us to gain a foothold in communities
that are often marginalized. For example, AUSA is the only microlender serving the Haitian
community in Miami in partnership with Santla Neighborhood Center. The process of receiving a
loan and learning how responsible credit works in the US is part of the work that we do in
integrating newer immigrants into the financial mainstream.
Working in Partnership with Banks and other Non -Profit Institutions: AUSA knows that it cannot
go it alone —that there is power behind leveraging the strengths of other organizations. AUSA is
partnering with local banks in Miami to raise awareness of our services. For example, Bank of
America and ACCION have worked together to create a Bank Referral Program, where clients
that don't qualify for bank loans are steadily referred to ACCION for other business resources.
Additionally, as clients need other resources to build their businesses, we link them with more
specialized business services. One of Miami's largest law firms, Greenberg Traurig, has
partnered with ACCION since 2004 to provide clients with legal advice on special topics such as
contracts, patents, and business structures. We also partner with the U.S. Small Business
Administration, Enterprise Community Center/Minority Business Development Center, Florida
Atlantic University Small Business Development Centerrnd the Women's Business
Development Center.
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Request
In 2002, AUSA commissioned the Roslow Research Group (RRG) to conduct a feasibility study
in the City of Miami to evaluate the need for our services in the area. RRG estimated that in the
Miami market study area (MSA), there are a total of 77,500 microentrepreneurs. Of these, 13,500
are African American and 39,400 are Latino. The great majority of these microentrepreneurs -
68,800 - have not received a loan from a bank or other conventional source for their businesses.
Having served 550 entrepreneurs to date (excluding repeat clients), there clearly remains an
unsatisfied demand for our services. The greatest challenge we face in addressing such demand is
a lack of awareness of our services among our target population. With $200,000 in continued
support from the City of Miami we aim to transform AUSA from a "best kept secret" into a
widely recognized, leading resource for small business development and financial literacy. With
your support, we will engage in multi -pronged targeted outreach campaign, utilizing creative
channels and tapping into the respective networks of our partners to build awareness:
▪ Targeted advertising — Due to current budget limitations for marketing it is difficult to
consistently invest in strategies with broad visibility. We will increase frequency of paid
advertising in targeted print and radio sources and will also create greater visibility
through investments in billboards and signage throughout the City.
• Grassroots outreach — Grassroots outreach has historically been the most effective way
to reach our target audience. During the project period we will specifically focus on
reaching small business owners in Allapattah, Little Haiti, East Little Havana, South
Coconut Grove - areas with a heavy concentration of small businesses. Through
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blockwalking, flyering, mailings and the organization of information sessions we aim to
make our presence known in the area.
• Financial Literacy - We will work in tandem with the City of Miami and community
partners to organize a series of financial literacy workshops in English and Spanish
throughout the City. The purpose of the workshops will be to provide participants with
information about starting a business, credit, money management and business taxes and
insurance; as well as build awareness of services provided by AUSA and our partners.
• Partnership Building — We have not yet tapped into existing networks of small business
services providers (including tax preparers, CPAs and legal advisors) in Miami for cross
referrals. We will build partnerships with such groups by developing a referral incentives
program and organizing co -sponsored events, such as a Family Financial Fair during tax
season to help LMI individuals file their taxes and build awareness of services available
in the local community.
• Chambers of Commerce Membership — Another large network of organizations that
we have not tapped into due to budget limitations are the various chambers located in
Miami. As members we would be able to make frequent presentations at events and
meetings to spread the word about our services.
Outcomes and Evaluation
1. Organize 24 financial literacy workshops during the project period, attracting 360
attendees. Workshop participants will be asked to fill out valuations at the completion of
each workshop. We will additionally follow up with a sample of participants three
months after they attend workshops to evaluate the effectiveness and overall impact of
the training. ti
2. Disburse nearly $800,000 million in 160 loans in the City of Miami during the project
period. All loans disbursed in the City of Miami will be disbursed through the ACCION
USA Loan Fund, currently capitalized at $7.8 million.
3. Create 30 jobs as a result of our lending program.
4. Retain 60 jobs as a result of our lending program.
5. Contribute to increases on business assets, sales and take-home income among AUSA
clients.
Loan disbursements, job creation and job retention are tracked through AUSA's three-part
systems platform, comprised of a contact management system, loan processing and servicing
system and a reports database. Increases in business assets, sales and take-home income are
recorded via an exit survey mailed to all AUSA clients as they pay off their loans. Overall, our
evaluation tools are not as robust as we would like for them to be. We would like to use a portion
of funding from the City of Miami to improve our impact tracking abilities.
Staffing
Our efforts in Miami are made possible by four salaried staff and two Americorps VISTA
Volunteers:
• William Mateo —Program Director. Mr. Mateo oversees Miami's marketing,
communications and lending operations and maintains quality control of the loan
portfolio. Prior to joining AUSA in 2003, Mr. Mateo worked as a Team Leader at
ACCION New York.
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USA
• Christina Bonnet — Loan Officer. Bilingual in English and Spanish, Ms. Bonnet is
responsible for assisting applicants with the loan process, loan disbursements and
conducting outreach to target populations.
• Joanna Milord — Loan Officer. Bilingual in English and Haitian Creole, Ms. Milord is
responsible for lending and providing support to Haitian small business owners.
• Matthew Neeley — Loan Officer. Bilingual in English and Spanish, Mr. Neely is
responsible for assisting applicants with the loan process, loan disbursements and
conducting outreach to target populations.
We do not foresee the need to hire additional employees for the project outlined in this proposal.
Budget
Please see the attached project budget for a detailed breakdown of how support from the City of
Miami will be allocated.
Sustainability
As the volume of our loans increases year after year for our Miami program, so does our
operational self-sufficiency. While we anticipate reaching 45% self-sufficiency by year-end 2007,
we will still need to raise 55% of our operating costs. Support provided by the City of Miami will
help AUSA to reach our fundraising goal for the year. For each of our lending programs, we
strive to cover al] costs with local funding sources — your support will make this possible for our
Miami program in 2007. Additionally, we will leverage your support to continue to attract other
funders to our program, further diversifying our donor base.
Conclusion
We greatly appreciate the support provided by the City of Miami to AOSAt over the past three
years. You have helped to create one of the nation's most successful microfinance programs.
Despite our success we continue to see an urgent need for the services that we provide in the City
of Miami. Together we can help 160 business owners grow their business, support their families
and revitalize their communities during the next year.
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