Post on 14-Jan-2016
Micro Enterprise Lenders
Building Small Business in
our Communities
Association for Enterprise Opportunity
AEO is the national trade association for Microlenders.
AEO has over 400 member organizations across the United States.
Website at:
www.microenterpriseworks.org
What is Micro Enterprise Lending?
Micro enterprise lending is an income generating strategy that helps low-income people start or expand small businesses.
Goals:
To develop increased income and assets
for Micro entrepreneursTo build local economic development by
increasing job opportunities for
customers
Characteristics of Micro Enterprises
Primarily sole proprietorships
Small scale loans – typically up
to $35,000
A Typical Microlender
Characteristics:
Supports smaller scale loans
Serves 200 people per year
Makes an average of 50 loans per year
Has a portfolio value between $500,000
and $600,000
Services provided by Micro Enterprise development organizations
Training and Technical Assistance Before loan services
Help the customer define and clarify:Business visionBusiness planTarget marketPricing strategy
Services provided by microenterprise development organizations
Graduation and Follow-up ServicesPost loan services
Assist entrepreneurs success:LicensingSoftware ApplicationsMarketing
Available CapitalTwo Common Loan Models
In-House Loans Provide loans directly to entrepreneurs
Loan Pools Have special loan pools set up with
banks that lend funds
Types of Loans
Individual LoansLoans range from $500 - $35,000Given to an individual or an individual
business
Peer Group LoansLoans range from $500 - $750Short-term loans of less than one yearOnce loans are repaid, the borrowers
can go on to borrow larger sums
What to look for in a MicrolenderLook for a Microlender that will: Understand the customer’s need for
credit planningQ: What credit planning does the lender provide the customer?
Provide training and follow-up services
to borrowersQ: Does this Microlender help develop business plans and other skills needed for a business?
Does it help assess whether self-employment is the right option for the customer?
What to look for in a Microlender (Continued)
Look for a Microlender that will:
Make good loansQ: What are the loan policies and underwriting guidelines? How are loans assessed? Do they provide credit counseling?
Manage portfolios wiselyQ: How is risk assessed? What is the default rate?
Evaluate outcomes and successesQ: What benchmarks guide the program?
What AFPs and Telework loan programs bring to MicrolendersThe opportunity to reach people with disabilities
Clients with disabilities who are well- prepared and motivated customers
Credit enhancement tools, such as loan guarantees
Resources:Association for Economic Opportunitywww.microenterpriseworks.org
Abilities Fundwww.abilitiesfund.org