Global Small Business Lender Ready To Open Doors In Miami
By Frank Norton
Boston-based Accion USA, the nation’s largest micro-lender, plans to open its first Miami-Dade County office next week and begin aiding small businesses by March.
The move is an effort to leverage the county’s underserved small business community, which has grown to about 77,000 firms, the global non-profit organization said.
Worse, 88% of the community has never received a bank loan because entrepreneurs have poor or no credit history or are intimidated by lengthy approval processes, Accion says.
That’s a major credit gap, Accion officials say, since existing micro-lenders in Miami-Dade serve only about 0.5% of a growing need base.
It partly explains why the organization kicked off its Miami operations ahead of expansion into Los Angeles, a far larger market.
According to other lenders, micro-lending was pioneered in Bangladesh in the late 1970s by Muhammad Yunus, a former economics professor who started Grameen Bank to empower rural women.
Yunus’ basic trickle-up principle remains essentially the same in urban America as it was in rural Bangladesh, striving to build a self-sufficient workforce out of financial untouchables that banks cannot or will not support. That includes bad and no-credit individuals looking to build or expand a business.
Miami has a higher-than-average concentration of people living and working outside the mainstream economy, says Luz Gomez, Accion director for Miami.
She and her team aim to nurture struggling entrepreneurs and eventually graduate at least some of them into higher business stratums that banks recognize. The task is difficult and well-educated prospects in Miami are hard to come by, she said.
Greater Miami – while known as the Gateway to the America – is also the nation’s poorest metropolitan area, with an estimated 31.9% of the population living below the poverty line, according to the US Census Bureau. Moreover, Miami-Dade County maintains the highest jobless rate in the state, 7%, despite dramatic improvements during the past year.
With a headquarters ready to open at 111 SW Fifth Ave. in East Little Havana, Accion looks to open a satellite office in Little Haiti by mid-February.
"We target low- to moderate-income communities because those are the ones that need us most and they’re also the ones with the fewest resources," Ms. Gomez said.
Similar to other micro-lenders, Accion provides loans ranging from $500 – $25,000 at 10% and 12% interest to home-based and storefront businesses.
Although loan repayment is typically about 95%, few businesses actually succeed, she and other lenders said.
"But what’s interesting to us in Miami is a population like that in Little Haiti, where there is a need for economic-development resources and where we can apply our experience in Haiti to a Creole community in the US," Ms. Gomez said.
The privately funded group said it has already committed about $1.7 million in loan capital for the Miami market during the next three years, in which time the City of Miami and private contributors have pledged to help cover operating expenses.
Last week Miami Mayor Manny Diaz met with Accion officials in Washington and reiterated plans to give about $200,000 during the next two years as part of his $2 million poverty initiative announced in September.
"We’ve been talking to them for about a year and are very excited that they are coming to this community with their own money," said Javier Fernandez, senior adviser in the mayor’s office.
Other micro-lenders in town also welcome the newcomer.
"I don’t consider them a competitor," said Diane Silverman of Micro Business USA, a federally funded program. "There’s enough poor people to go around."