What is microlending?
Community organizations and lenders offer microloans to start-up and expanding very small businesses whose owners do not qualify for traditional bank financing. The loans, generally under $50,000, are used for either working capital or investment in fixed assets. Many major banks are not offering business loans under $250,000. CAMEO’s network of microlenders are stepping up to fill this financing gap for California’s smallest businesses.
Micro-businesses are everywhere in California – the organic tomato farmer at the Saturday market, the childcare center, the technology service firm who fixes your computer, your pet’s vet, your dry cleaner, your favorite neighborhood cafe’, or the new sophisticated ice cream truck.
CAMEO’s Role
CAMEO has 28 member who are microlenders (List of CAMEO Lenders / Map – forthcoming)
CAMEO’s multi-faceted approach to expand microlending in California includes:
- Expanding available loan capital;
- Training on financial statements and loan referrals;
- Streamlining the underwriting process with web-based platforms;
- Providing options for loan loss reserves; and
- Advocating for state and federal microfinance and business assistance programs.
Through these efforts we hope to build the loan pipeline, increase quality referrals, and expand the number of loans made. In November 2011, more than 20 CAMEO microlenders attended our Microlending Summit. A summary of the discussion is found in our whitepaper, Microlending and Growing the Field.
New Initiatives for 2012
- KIVA: We are developing an opportunity for qualified CAMEO member lenders to find capital for their borrowers through the Kiva’s web platform. We will have an informational webinar and develop an application process so that our members can offer a Kiva-branded loan product.
- Microloan Management Service (MMS): In partnership with Accion Texas, CAMEO will offer a web-based underwriting platform to help lenders increase volume, expand their reach, reduce turn-around time on applications and reduce default rates. MMS provides back-room support for loan decision-making and loan management, while allowing staff to focus on outreach and business coaching.
Both partnerships will expand microlending in California.
Contact Susan Brown for questions.
Microlending FAQ’s
Who does microlending? What types of organizations?
Who takes out a microloan?
Where do microlenders find their capital?
What makes microlenders and microloans different from banks and traditional loans?
Explain eligibility, underwriting, loan terms and interest rates.
What are the differences between international microfinance and microfinance in the U.S.?
Other Resources
Microfinance USA conference
Microlending Action Plan, 2008
Microfinance 101 and 102 from the San Diego Microfinance Alliance.