ACCION USA 2013 Annual Report 2013 Annual report 路 1
2 路 Accion usa
“Fundamentally what microfinance does is it addresses some human needs. Human needs such as participation in society or inclusion. The need for creative self expression. The need for identity or self esteem. And the need for economic self-reliance.” -Paul Quintero CEO Accion East
2013 Annual report · 3
TABLE OF CONTENTS
07 08 12 MISSION
4 路 Accion usa
ABOUT ACCION
OUR IMPACT
14 16 22 24 EDUCATION
ACCION BORROWERS
FINANCIAL SUMMARY
OUR STAFF
2013 Annual report 路 5
6 路 Accion usa
MISSION The mission of accion USA is to make credit a permanent resource to low- and moderate- income small businesses owners in the United States. By providing small or “micro” loans to men and women who have been shut out of traditional banking, accion USA helps build their businesses and increase their incomes. accion USA sees business credit as a resource that can help narrow the income gap and provide economic opportunity, thereby stabilizing and strengthening communities and economies. At the heart of this vision is the recognition that microlending institutions must be financially sustainable, not perennially dependent on donations or government aid. This is the reason, accion USA’s microlending programs seek to become financially self-sufficient. accion USA’s lending methodology is character-based. Unlike traditional lenders, we don’t make loans based on credit history or collateral alone. Instead, we focus on our potential borrower’s initiative and desire to succeed, knowledge of his or her business and market, as well as on references from customers and neighbors. Our loans range from $500 to $50,000 with terms of three to 36 months. We offer loans designed to match the credit needs of each business, the borrower’s character and the business and family income and expenses. In cities across the United States, Accion USA serves women and men who operate everything from part-time, home-based businesses to storefront locations with several employees. Our borrowers are small manufacturers, daycare providers, taxi drivers, restaurant owners, contractors and artisans. They are single mothers on public assistance and storefront owners with small, but well-established businesses. They are immigrants and people whose families have lived here for countless generations.
Janet Thompson, Board Chair
2013 Annual report · 7
ABOUT ACCION
why invest
How it works
Accion usa has made over 43,000 loans totaling $332 million since our inception in 1994. Our loans and services are individualized with average loan sizes currently at $10,049. We are further pleased to announce that we have a 90% loan repayment rate, demonstrating the commitment clients have towards bettering their businesses and creating lasting econ-omic stability. There are lots of ways to invest your money, so why invest with us?
The Accion usa Loan Fund is a vehicle for socially responsible investors—both individual and institutional— to strengthen small businesses and the communities where they operate. An investment in our loan fund will increase the availability of business credit to hardworking women and men who otherwise have few borrowing options. Here’s how it works.
Scope As the only loan fund with a national scope, the Accion usa Loan Fund enables socially responsible investors to help provide desperately needed business credit to people who have low- and moderate-income levels. impact Since 1991, Accion usa has lent more than $91 million to over 10,400 U.S. business owners with an average loan size of $5,200. Historically, 86% of our borrowers are minorities, 55 percent are qualified as low-income and 45% are female. As a result of our loans, microentrepreneurs who have taken just two consecutive loans show an average of 38% increase in monthly take-home income. Security We put time and care into the administration of the Fund, and it shows. Since its inception in 1994, no investor has ever lost money in the Accion usa Loan Fund.
8 · Accion usa
The Fund uses loans from investors to: · Lend directly to microentrepreneurs via Accion usa’s lending offices all over the country. · Make direct loans to Accion usa’s Associate pro- grams to provide funds for their lending activities. ·
Provide guarantees to local banks to secure loan capital for Accion usa’s Associate programs. At present, the Fund is seeking long-term, low- inter- est loans (minimum $2,000) to capitalize a pro- jected $15 million loan pool.
Investing in an Accion usa loan is not only a smart investment, it is a socially responsible investment. The investment won't just affect the person who gets the loan, it will affect their family, the people who work in the business and the community the business is in. Accion usa believes that true social change starts one loan at a time, one person at a time, and one community at a time.
$2.2
million more in loans in 2013 over 2012 2013 Annual report 路 9
98 business survival rate for borrowers with established businesses 10 路 Accion usa
$20
* In 2011, accion uSA merged with ACCION New York and the numbers from 2008 onwards reflect that of the combined entity
million
$15 million
$10 million
$5
million
13
20
12 20
11 20
10
20
08
07
09
20
20
20
06
20
05
20
04 20
active year end portfolio
2013 Annual report 路 11
OUR IMPACT
The Small Business Jobs Act that was signed last year suggests that the United States is moving in the direction of microfinance to improve the economy. This Act increases the amount of loans available to small businesses and entrepreneurs. Will this help communities in the United States? it helps the growth of small businesses Many budding entrepreneurs are unable to get a loan from the bank to start their business. Microfinance institutions are able to provide these smaller loans to medium to low income entrepreneurs. The impact of their small business then has a ripple effect on the local community and its economy. Small businesses bring a range of improvements to the whole community. When a small business opens in an area, that business owner creates ties to the area and the people in it. The health of his business becomes dependent on the health of the community surrounding it. they create jobs and inspire quality. Small businesses on average create between 3–5 jobs each year. These jobs also tend to hire members of the community in which they open. Not only does this create jobs in the community in which it opened where new workers can become trained in various skills, but it also improves all the ties between members of the community. Small businesses have a lot of competition from large corporations here in the Unit-
12 ¡ Accion usa
ed States. One thing that small businesses can offer over several large corporations is a commitment to quality and customer service. Small businesses need to rely on their customer’s opinion of them, rather than promise of cheap prices. Therefore maintaining a high quality products or services is more important to a small business than it is for larger businesses. Because of its ability to assist in increasing the development of small businesses, microfinance in the United States is extremely important, especially on the road to our economic recovery. That is why it's important that we continue in our efforts to expand nationwide. A recent study commissioned by ACCION USA revealed that there are 13.1 microentrepreneurs (defined as a business owner with five or fewer employees) in the USA. Currently, 82% of these microentrepreneurs have never accessed bank credit for their businesses. In response to this study, ACCION USA has begun working on centralizing loan processing, exploring internet-based lending, call centers and opening new lending offices. As we expand our online presence, we are able to reach out to more small business owners in need and also offer financial education services to those who might not otherwise have had resources.
Key State you can apply for an Accion USA loan State with an Accion USA loan office presence
1. chicago, il
4. Atlanta, GA
7. Albuquerque, NM
Initially an associate of Accion usa international, this branch became part of Accion usa shortly after the incep- tion of the organization in 1994.
2. Boston, MA
In addition to Accion usa’s normal loan services, Boston has a unique program with the Boston Beer Company called Samuel Adams Brewing the American Dream. Educational seminars, financial assistance and networking programs are geared specifically to wards food and beverage entrepreneurs.
3. New york city, ny
In 1991 Accion usa began lending its first loans in Brooklyn. Since then, loan offices have expanded tremendously throughout the United States.
Georgia ranks first in the United States in entrepreneurship with 580 entrepre- neurs per 100,000 residents. Atlanta boasts even greater numbers, with 740 entrepreneurs per 100,00 residents!
5. miami, Fl
Our office in Miami offers a unique one- on-one course for small business owners in which they can learn about their spe- cific credit score and strategies they can use to improve it.
6. san antonio, tx
This branch is a strong partnership between Arizona, New Mexico and Colorado. An area of the United States celebrated for its cultural, racial and social diversity, Accion usa works hard to give entrepreneurs here the tools needed to maintain that atmosphere.
8. san diego, ca
Accion usa’s San Diego office works extensively within the Southern California neighborhoods, creating strong community networks that aid in the suc- cess of local microentrepreneurs.
Accion usa’s Texas office was started in 1994 and was so successful that it has since grown to employ 100 people in seven additional states: Alabama, Arkan- sas, Kentucky, Louisiana, Mississippi, Missouri, and Tennessee.
2013 Annual report · 13
24%
higher wages paid to employees of borrowers than the national minimum wage of $9 an hour
14 路 Accion usa
EDUCATION
ACCION USA has educational programs and resources founder of Stacy’s Pita Chips, explained the imporavailable all over the United States. From online tools tance of targeted marketing strategies (it’s like a fire to seminars taught by our experienced entrepreneurs, hose: you have to focus your efforts, not just spray ACCION USA works to aid in the success of its many aimlessly). And John Pepper, the founder of Boloco, borrowers. This very experience was recorded by one emphasized the necessity of resilience (he pitched of our employees Sean Peterson: his business to 39 investors before he heard the word Yesterday afternoon, the streets of Boston were “yes”). The impact of the program is clear in attendee damp and a bit dreary. But indoors, things were bright: Ali Rice's feedback we recieved. teachers dispensed knowledge, students absorbed “I just wanted to let you know how great yesterday every word, and both listened and learned from each was. I was amazed at how eager and enthusiastic others’ experiences. But this scene’s setting wasn’t all the panel members, Sam Adams, and ACCION USA the halls of Harvard or MIT. Rather, it was the secondwere to lend a hand to micro entrepreneurs. It was floor ballroom of the Park Plaza Hotel, where ACCION truly inspiring as well as empowering. As a food indusUSA and The Boston Beer Company presented their try member, I have many friends and colleagues with inaugural Brewing the American Dream u: a free, half- dreams of starting their own venture and I’m certain day event for entrepreneurs in the food, beverage, they are not aware of these incredible resources that and hospitality industries to receive expertise from are available to them through this program.” leading local business owners. The event was an important step in strengthening Over 150 entrepreneurs attended. For four hours, the Boston Beer Company - ACCION USA partnership — they listened as fifteen experts shared advice and appropriately named Brewing the American Dream — fielded questions on topics including “What I Learned which launched in 2008. In the past five years, the on My Way to the Kitchen” and “Getting Your Product program has provided loans to small business owners Ready for Retail.” The advice was timely, inspirational, in Massachusetts and, in doing so, saved or created and most importantly, honest. Jim Koch, founder of 705 jobs. The partnership not only involves loans but, The Boston Beer Company, discussed the salesman’s more so, financial education and “speed coaching” mentality (every time he walked into a bar, he had events designed to empower entrepreneurs with the only seconds to determine why the people sitting at knowledge they need to build their businesses. These the counter should drink his beer and why the person programs support entrepreneurs and prepare them behind the counter should sell it). Stacy Madison, for the many challenges of business ownership.
2013 Annual report · 15
ACCION BORROWERS
Although Accion usa provides credit without discrimination to everyone who meets our lending criteria, we specialize in working with those who often lack access to credit— women, immigrant, and minority business owners.
16 ¡ Accion usa
27%
African American
51% Low Income
45% Female
61%
Hispanic or Latino
2013 Annual report 路 17
WHO WE ARE
Accion USA's clients are leaders in their community and their fields. With each Accion USA loan given, 3.5 jobs are created, and that figure does not include the person taking out the loan. Profits increase by 47% and business equity increases by 42%. Beyond the financial benefits, our clients report being happier in their lives and more involved in their local community.
18 · Accion usa
1. KARI
2. CARLOS
nyc foodie Kari Morris started Morris Kitchen, a Brooklyn-based ginger syrup manufacturer, over 2 years ago. With growing demand for Morris Kitchen ginger syrup, Kari needed to prepare for a busy holiday season. Kari contacted a bank for a loan but had a difficult time securing financing. Like many college grads, a short credit history and student loan debt made it difficult for Kari to find funding to start her business. ACCION uSA Loan Consultant Liz Bueno looked beyond Kari's credit score and approved her with a loan that was administered within a week.
In El Salvador, Carlos Trigueros was a mechanical engineer but was forced to leave his country due to violence. In 1993, Carlos started his very own business in Somerville, Trigueros Auto Repair. Today, 15 years later and it is still a thriving business with much to offer not just its many customers, but also his community. He was approved for a $7,000 small business loan which helped him invest in a year of radio commercials. Currently, Trigueros Auto Repair boasts over 200 loyal clients. “The advertising has enabled me to get a many customers from different areas.”
3. BELINDA
4. CLAUDIO
5. AMY
Increasingly, couples, families, and corporate clients are choosing top Miami ACCION USA client Elite Catering and Event Planning to make their important events even more special. Founders Rosendo Ramon and Belinda Martinez combine fourteen years of experience with a commitment to handling all the details— from the menu to the types of music. “The loan from ACCION went to expand inventory of plates, linens, glasses, and flatware,” Rosendo said. “Now we can definitely handle larger events and serve like a one-stop shop.”
Fascinated by the great variety of produce that is grown in the uS, Claudio made a decision 7 years ago to rent land and start his farm of his own. Claudio looked for loan capital to help cover the cost of his next batch of seedlings for the spring, but short credit history really made it challenging for him to secure funding for his business. Claudio attended a financing workshop and met Erica Dorn, who saw potential in Claudio's business. He was approved a $2,000 microloan for seedlings, helping Claudio to stabilize his business during tough winter months.
In 2008 Amy decided to turn her little hobby of making handbags into an enterprise. Fast forward to 2011: Amy + Owen Handbags is an incorporated business with a product line sold in over 35 fashion boutiques around the New York City area. It was not until Amy's best childhood friend passed away from breast cancer that she finally decided to just turn her hobby of making bags into an enterprise. With ACCION uSA's support, Amy was able to expand her business, allowing for a buffer for a tradeshow in Atlanta where she was able to tap into a new market.
2013 Annual report · 19
“We believe in a financially inclusive world— one in which every individual has access to a full range of high quality, affordable financial services. With access and the right financial tools, people have a greater opportunity to capitalize on their abilities and achieve real economic gains, building brighter futures for themselves and their families.” -Michael Schlein CEO Accion International
20 · Accion usa
Financial Summary
Statements of financial position as of December 31, 2012 and 2013
Balance Sheet
2013
Assets Cash and cash equivalents 5,137,534 Cash restricted for loan funds 1,577,229 Contributions and grants receivable, net 3,322,827 Interest on loans receivable, net 33,503 Microenterprise loans receivable, net 5,629,370 Investments 931,145 Other assets 390,343 Property and equipment, net 315,306 Total Assets $ 17,317,257 $ Liabilities Accounts payable and accrued expenses 293272 Notes and recoverable grants payable 9,609,843 Other liabilities 420,966 Subordinated debt 3,050,000 Total Liabilities $ 13,374,081 $
2012
5,231,485 1,404,655 4,148,040 48,510 6,194,788 907,955 398,148 477,026 18,810,616
417,188 10,589,991 443,050 3,050,000 14,500,229
Net Assets Unrestricted 1,374,742 1,398,492 Temporarily restricted 5,317,918 5,708,879 Total Net Assets 3,943,176 4,310,387 Total Liabilities and Net Assets
22 路 Accion usa
$
17,317,257
$
18,810,616
Revenue and Expense Statement
2013
2012
Support and Revenue Contributions and grants Interest on loans Program fees Investment income Other revenue Total Revenue Total Support and Revenue $
4,964,168 717,121 264,637 40,224 207,889 1,229,871 6,194,039 $
6,432,820 926,602 379,043 22,250 201,140 1,529,035 7,961,855
Change in Net Assets Net Assets- Beginning of Year Net Assets- End of Year $
367,211 4,310,387 3,943,176 $
1,100,917 3,209,470 4,910,387
Expenses Program Services Lending/development service 4,667,802 5,477,616 Network 662,560 0 Total program services 5,330,362 5,477,616 Supporting Services Management and general 783,891 891,771 Fundraising 446,997 491,551 Total Expenses $ 6,561,250 $ 6,860,938
2013 Annual report 路 23
OUR STAFF
24 路 Accion usa
PAUL QUINTERO CEO NEIL BOSS Director of Risk & Operations LIBARDO CLAVIJO Controller ELENOR DENKER vp, Resource Planning & Administration ANA HAMMOCK Director of Lending ASHLEY WESSIER Director of Development MARIA ALVAREZ Asset Recovery Associate/Credit Coaching LILLIAM ARIAS Quality Control Associate/Customer Service ALEJANDRA BOGGIANO Communications Manager ELIZABETH BUENO Senior Loan Consultant SANDRA CELY Accounting Associate RODRIGO CERVEIRA Senior Loan Consultant, New England Team Leader ERICA DORN Business Development Officer CARMEN DUPERON Senior Manager, Client Services FABIANA ESTRADA Loan Consultant, Florida Team Leader MARCO FIALLOS Bilingual Analyst KEN FORD Database Administrator/ Programmer YLEANA GARRIDO Team Leader, Asset Recovery/Credit Coaching DIANA GOLOPENTA Loan Consultant RACHEL GREENWALD Loan Consultant VALERIE GURZENDA Loan Operations Associate ROB KOSTAS Senior Underwriter JANET THOMPSON Chair of the Board DOUGLAS URQUHART Secretary of the Board PIERS CARDEW Treasurer of the Board JOSEPH DIFILIPPI SVP/Chief Information Officer WILLIAM FENTON SVP Market Manager, Community Development KIMBERLY JOHNSON Partner HENRY LANIER Consultant & Chief Executive
26 路 Accion usa