With loans and advice, Accion Chicago helps borrowers succeed.
by Shari Held
This year Accion Chicago, a non-profit microlender affiliated with Accion International, is celebrating its 20-year anniversary. And the thousands of underserved, aspiring entrepreneurs and small business owners the lender has helped over the years are celebrating right along with Accion. That includes clients from seven Northwest Indiana counties–Lake, Porter, Jasper, LaPorte, Newton, Pulaski and Starke.
Accion’s mission is to provide people who don’t meet traditional loan criteria with the education and financial tools they need to rebuild their credit, start a new venture or expand an existing business. The Chicago office’s current client base includes: African-Americans (37 percent), Hispanics (20 percent), immigrant-owned businesses (23 percent), women-owned businesses (49 percent).
Overall, Accion Chicago has made more than 3,600 small business loans, totaling $27 million. Last year it provided advice to more than 2,600 small businesses and made 430 loans totaling more than $3.6 million. The average loan was $8,361.
Credit scores aren’t a criteria for obtaining a loan with Accion. What’s more important is that clients have a strong business plan and demonstrate a willingness to put in the work to succeed. Loans do need to be secured by either a cosigner or a form of collateral. But Accion accepts alternative collateral–a delivery truck, an automobile or other business assets–that banks and other financial institutions won’t consider.
“It’s important to us to have small business owners feel that they are invested in their business,” says Mary Fran Riley, vice president development and communications for Accion Chicago.
The amount of time Accion spends educating its clients pays off. Its impact is especially notable when it comes to startups, which comprise 32 percent of the businesses Accion Chicago funds. A recent University of Chicago impact study found that 92 percent of Accion Chicago’s clients were still in business after two years, compared to the national average of only 66 percent.
“Sometimes clients come to us looking for $50,000 and maybe they’ll walk away with $5,000, and they’ll launch their business more slowly than they thought,” Riley says. “Our goal is to have these entrepreneurs be successful. Not to bite off more than they can chew and then end up as a statistic.”
Consequently, the microlender has a very low default rate. “Folks pay us back,” Riley says. “That’s partly because we had faith in them and in some cases were their last hope.”
Accion Chicago enjoys great partnerships with small business development centers such as Hammond Innovation Center and small business bankers. Since the microlender represents no competition to banks–alternative loans are the only products it offers to clients–banks often refer their customers to Accion. In return they often receive a bonus of improved customer loyalty.
“Instead of just saying ‘no,’ they can offer a solution,” Riley says. “And oftentimes we can be that solution.”