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2015 Annual Member Meeting Prep

For the member meeting we ask that you do two things: 1) make appointments with your legislators for the morning; and 2) read AEO’s white paper on Understanding the State of Technical Assistance for the afternoon discussion.

Meetings with Legislators

In the morning, after a short member meeting, we will give you tips, training and talking points for our key advocacy issues this year. Then, you will be off to visit your legislators between 10:45 and 12:15. Please make your own appointments; here’s how:

  • Find contact information for your assembly member(s) and your senator.
  • Send a written request to the scheduler as well as call the office.
  • If the legislator is not available, ask for a meeting with the chief of staff.

If you are from an area that only has one representative in each house, coordinate with other CAMEO members who may be attending. If you are from a large area that has many representatives, we will divide and conquer. Contact Andrew, who will help coordinate with other members who will be going.

The topics of your legislative visits include the importance of the microbusiness sector to local economies and three crucial issues – depending with whom you meet:

  • SB 197 (Block), co-sponsored by CAMEO and Opportunity Fund, will help small businesses be more aware of capital resources offered by mission-driven microlenders. This bill has passed through Senate appropriations and is likely to pass the Senate floor, which means the Assembly is the next stop. It will be crucial to educate your assembly members on the merits of this bill. You will thank your Senators for their support.
  • AB 184 (Garcia) will codify business technical assistance (SBDCs, WBC, SCORE, VBOC and PTAC) and allow state agencies to directly contract with them and fund them. Right now it is in the Assembly Appropriations Committee.
  • We are looking for a champion for the importance of women’s business ownership in closing the wealth gap.

For more information and a full agenda for the day, visit the annual meeting page on our website.

Re-imagine TA Business Assistance Services

At the recent AEO Leadership Summit, a big topic of conversation was the possibilities and future of the microbusiness industry. We’re going to engage in an interactive exercise to ponder these questions.

  • In what ways does business assistance need to change for the industry?
  • In what ways does it need to change to support the entrepreneurs of the future?
  • What obstacles must the industry overcome to redesign business assistance delivery to support the future Main Street?

Read AEO’s white paper on Understanding the State of Technical Assistance for background.

Michael Shuman Biography

Michael Shuman is an economist, attorney, author, and entrepreneur, and a globally recognized expert on community economics. He is one of the architects of the crowdfunding reforms that became the “JOBS Act,” signed into law by President Obama in April 2012. Michael is currently Director of Community Portals for Mission Markets and a Fellow at Cutting Edge Capital (a CAMEO Member), and Post-Carbon Institute. He is a founding board member of the Business Alliance for Local Living Economies (BALLE – a CAMEO reciprocal member). He is also an adjunct instructor in community economic development for Simon Fraser University in Vancouver. Michael has authored or coauthored eight books on the topic.

“Dream Big” This National Small Business Week, May 4-8

This post courtesy of:

Maria Contreras-Sweet
Administrator, U.S. Small Business Administration

MariaCS1With apologies to baseball and your mother’s apple pie, nothing is more American than National Small Business Week.

Our country was founded by risk-taking pioneers in search of new horizons. More than two centuries later, what sets America apart in the world is the willingness of our entrepreneurs to take risks. Small businesses allow Americans to be their own boss and improve their lot in life through hard work – a core American value.

Every year since 1963, the President of the United States has issued a proclamation declaring National Small Business Week to recognize the critical contributions of America’s entrepreneurs, who create nearly two out of every three net, new U.S. jobs each year. Federal Reserve Chair Janet Yellen said it was our small businesses that powered our recovery after the Great Recession.

National Small Business Week, themed “SBA: Dream Big, Start Small,” will be held May 4-8. Special events will take place in Miami/Boca Raton, Los Angeles, San Antonio, New York, and Washington. D.C.

Tune in all week for live-streaming, beginning at 1 p.m. ET Monday with a panel discussion on small business financing followed by a conversation with Joyce Rosenberg of the Associated Press. Or join me @MCS4Biz at #DreamSmallBiz. I promise you’ll learn a lot.

America is one of the few countries that give entrepreneurs a seat at the President’s cabinet table. This allows the U.S. Small Business Administration (SBA) to speak with one voice on behalf of 28 million small businesses with divergent interests.

The SBA also offers an extensive national network of small business lenders and counselors that’s unmatched anywhere in the world. Many entrepreneurs with great ideas and great potential do not begin with great wealth, so they need a great government partner to support their success.

The SBA offers the “three Cs” to help the best and brightest start or grow a business, secure capital, and commercialize their ideas to benefit society:

  • Capital: SBA fill gaps in the commercial lending marketplace so success in the small business sector is based on merit, not family wealth. To inquire about a small business loan, click here.
  • Counseling: SBA provides free consultation and advice to help businesses on Main Street succeed. To find a small business counselor near you, click here.
  • Contracts: SBA levels the playing field with big business by helping small businesses capture new revenue and new customers by winning government contracts, joining corporate supply chains, and exporting beyond our borders. To learn about contracting opportunities, click here.

This year, during National Small Business Week, we recommit ourselves to those fearless entrepreneurs who plan well, work hard, and dream big. Every business starts small. Nike, Apple, FedEx, Ben & Jerry’s, Under Armour and Outback Steakhouse were all once small businesses, until they found an SBA lender or investor to work with them.

I came to this country as a 5-year old immigrant who didn’t speak a word of English. Today, I serve in the cabinet of the President of the United States. My story is possible only because of the entrepreneurial spirit.

Success in business comes one small step at a time. So dream big, but take that next small step today, because the next great American success story could be staring back at you in the mirror.

SBA Administrator Maria Contreras-Sweet started three businesses in Los Angeles, including a community bank, before joining President Obama’s cabinet in April 2014.

MicroLending Academy Newsletter – Building Capacity

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 Hi {FIRST_NAME|Friend},
 
The MLA newsletter is chock-a-block with articles, resources, technology, success stories, interviews, and big picture ideas on all Lending Academy features. This edition focuses on capacity building and lists several opportunitties for training, whether they be peer calls, webinars or tools you can use.  
 
In this Issue…

  • Take Action: Increase Capital Access for Microbusinesses
  • Excellence in Lending Step Two – Definitions
  • MMS Update: Peer Calls
  • Success Story:  VEDC – 36 Deals Per Staff
  • Best Practices:  Projecting Loan Capital
  • Research:  Joint Small Business Credit Report
  • News
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Take Action: Increase Capital Access for Microbusinesses

  1000947586 We are co-sponsoring SB 197 (Block) with Opportunity Fund. The bill will allow California's microlenders to pay referral fees to consultants, non-profits (e.g. TA providers), and others who refer successful loans. It will give your clients more information about affordable lending products and enable microlenders to more easily compete with online alternative lenders.  

The hearing is April 29th in front and we need your letters of support if you haven't send them in already!

Download the SB 197 Support Letter Template and put it on your letterhead. Edit appropriately, then email to: Senator.Block@senate.ca.gov, and cc Eileen.Newhall@sen.ca.gov and me by April 21, 2015!

For more information check out the Must Know from February 19, 2015.  

Excellence in Lending Step Two – Definitions

 1000947586Our Excellence in Lending (EiL) program, focuses on the elements needed for a high-quality loan fund poised for growth.  Using Kiva’s Field Partner metrics as a starting point, we created an assessment that was the basis for a rich discussion at our 2015 MicroLenders Forum at the Federal Reserve Bank of San Francisco in mid-January. 

Susan Brown said of the assessment:

The reception of the assessment went beyond my expectations.  I was so happy to hear several people say that they wanted to revisit the assessment and have quarterly peer meetings to discuss, address issues revealed in the reports. 

Our discussion revealed the need to better define some terms so that organizations measure performance in the same way. Other issues that arose included creat benchmarks and operational standards and how to add sustainability and scale while reducing risk.  Once determined organizations' key ratios can be valuable to better position microlending to funders and policy makers.  

There was so much food for thought that we're holding our first EiL Peer Call on April 2 from 1:30-2:30pm.

Read Susan Brown's blog post about what the assessment measured and what topics showed a wide variety of standard of practice.

Technology: MMS Update – Peer Calls

Speaking of peer calls, one of the benefits of joining the MMS cohort are peer calls to help get the most out of your lending program.  Our first call for 2015 is on April 30th to talk about MMS reporting capacity. MMS has some horse power that we haven't tapped.  We will have a couple of sample reports and walk you through the report creating process.  For example, we can use MMS to look at demographic information about loan applicants or build reports on how your referral partnerships are working.

We'll also talk about future Peer Learning topics such as: your individualized underwriting grid,  application fees, staffing to maximize MMS, and identifying loan delay points.

To keep you updated on the progress of the MMS cohort — they made 92 loans for a total of $1.58 million for the program-year-to-date, and they are on pace to make an estimated 133 loans for $2.28 million, a 50% increase over last year.

Contact Susan Brown if you're interested in learning more or participating.  

Success Story: VEDC – 36 Deals Per Staff

 1000947586 VEDC’s microloan program has surpassed all its California CDFI peers in staff efficiency, averaging 36 loans closed per FTE staff person last year.

“We have an operational plan that has helped us gain efficiency,” says Brandon Napoli, Valley Economic Development Corporation’s Director of Microlending.  “We have agreements on who does what and how long each step should take.  We can monitor when things get off track.”

So far VEDC has implemented little automation.  “We’ve had a pretty manual process up to this point,” says Brandon.

Susan Brown talked to Brandon about how VEDC has scaled and how they plan to expand further in her latest blog post.
 

Best Practices: Projecting Loan Capital

CAMEO has developed a tidy 'Loan Capital Projection spreadsheet tool to project how much loan fund capital you will need based on loan volume, interest rate and loan loss rates. Susan Brown, our microlending guru, led a webinar to explain how it works on March 11,2015. We receieved several suggestions on how to improve it to meet your loan fund operational needs and will be updating the spreadsheet.  If you are interested in receiving an updated copy, email Andrew Cole, our data guy who created the spreadsheet. 

We even have one member who is using the tool to make the case for more loan capital which has impressed her investors!

Listen to the Loan Capital Projection webinar.

Mark your calendar for more MLA Best Practices Webinars

  • May 27:  Cash flow Projections will train your staff on projections and give them a format for teaching projections to business clients.
  • June 17:  Balance Sheet Basics is an introduction to balance sheet accounts, what they mean and how they work together.
  • July 8:  Balance Sheets Part II will provide an understanding of how management decisions impact the balance sheet so trainers can steer clients in the right direction.

Research: Joint Small Business Credit Report

The Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia studied small business lending in 10 states.  If we apply what they learned to California, we can conclude that the market for loans under $100,000 is huge.  

Eighteen percent of microbusinesses are looking for credit, which means more than 700,000 California businesses are looking for loans.  About half of them are looking for less than $100,000.  Collectively CAMEO members made over 2,000 loans.  A majority of small firms (under $1 million in annual revenues) and startups (under 5 years in business) were unable to secure any credit.  The top reason for denials was a low credit score.  

To us, this report spells opportunity Opportunity! for microlenders and business assistance providers.

The Federal Reserve will host a webinar – Key Findings from the Federal Reserve's 2014 Joint Small Business Credit Survey – on April 30, 2015 at 12:00pm PT.

News

WIPP’s Two Cents on SBA Contracting Rules

From our colleagues at Women Impacting Public Policy:

WIPP recently submitted comments to the Small Business Administration (SBA) on significant changes proposed for subcontracting. This blog accompanies those comments to help explain WIPP’s thinking.

The policymaking process is divided between the glitzy world of passing legislation and the often behind-the-scenes work of writing regulations. An important step in that process is the comment period, allowing the public, including the business community, to weigh in on the proposed regulations and – believe it or not – make changes.

WIPP comments on regulations affecting women entrepreneurs, including recent proposed rules to change subcontracting for federal contractors. WIPP generally supports the SBA’s implementation of contracting changes with comments in each section, some of which are described below. An important reminder, these are changes required by law already passed by Congress – this is not the SBA electing to make changes on their own, but instead the details of how those changes will be made.

Should you want to know more about WIPP’s positions, please look at the comments in their entirety.

 

New Limitations on Subcontracting

The new ruling would simplify the calculation of how much of a small business set-aside (including WOSB set-asides) can be subcontracted. Currently, it is 50% of the labor cost. The rule would make it 50% of the contract award.

While WIPP supports this change, WIPP is definitely aware of specific industries for which this change may not make sense. WIPP supports those industries reaching out to the SBA about their specific issues, which the SBA has said they will take into consideration. WIPP also asks a few clarifying questions, common to regulation comments.

 

Similarly Situated Entities

The rule allows an exception to the 50% described above: companies don’t count work subcontracted to similar companies (i.e. other small businesses, or WOSBs or HUBZones, depending on the set-aside) toward the 50%. This gives small businesses a great reason to work together on larger projects, one of the reasons WIPP testified in favor of this change.

 

Other Provisions

The rule deals with other changes – updating joint venture requirements, exempting the smallest of contracts from certain rules, additional roles for procurement center representatives (PCRs), and others – all of which WIPP supports. In those cases, our comments are included to explain the provision to other readers, and give reasoning behind WIPP’s support.

For many business owners, poring through regulations is not high on the priority list. Responding to proposed rules is a time consuming task – one that takes a lot of attention from WIPP’s Government Relations team. We are always looking for WIPP members’ views on regulation. By signing up for a WIPP committee that interests you or affects your business, you can stay informed on both legislative and regulatory changes. Remaining aware and being vocal about how your company may be impacted by any regulation is a key part of long-term success.

Testimony in Support of AB 184

Good morning, Chairman Garcia and members of the JEDE Committee. My name is Heidi Pickman from CAMEO – California Association for Micro Enterprise Opportunity.

CAMEO is the statewide network of 85 organizations that provide business assistance and loans to 20,000 very small and start-up businesses in diverse communities.

Our members include about 1/3 of the Small Business Development Centers and all 12 of the Women’s Business Centers in our state.

In 2013 Women’s Business Centers served about 3200 businesses that created 2700 jobs; 62% of their clients are low to moderate income.

Microentrepreneurs that have gone through business training programs and received business assistance from CAMEO members have an 80% success rate and create two jobs in addition to their own on average over 3-5 years.

Compare that to a 50-80% chance of failure without help.

And business assistance is the first step in the capital access process – you can’t get a loan if you don’t have a strong business plan or financials.

The crucial importance of business training, or technical assistance to business success is why we strongly support AB 184.

This bill will formalize state recognition of federally-recognized small business training programs that operate in California such as the Small Business Development Centers and Women’s Business Centers, and others.

Investing in business technical assistance is an extremely cost effective job creation strategy at $1-$3,000 per job, especially when compared to public infrastructure projects that cost $50-$100,000 per job.

Creating strong locally-owned small businesses, creates strong local economies and collectively will create a strong economy for California.

Thank you.

 

 

Small business not just another special-interest group

This article first appeared in the San Francisco Chronicle on April 9, 2015.

Chronicle business columnist Thomas Lee should be embarrassed to have his name grace “Debunking the moral superiority of ‘small businesses’” — a column clearly written by someone who doesn’t understand small businesses. Our groups don’t always agree on policies affecting small businesses, but we do agree that small businesses are the foundation of our economy, and lumping them into one narrow, ideological box buys into a long-standing myth that many in the political sphere would have everyone believe.

The unfortunate truth is that lawmakers often advance policies that favor large corporations over Main Street. And here’s where Lee missed the boat: the good reputation of small-business owners is often hijacked by these very lawmakers to justify policies that have no benefit to, and in some cases harm, America’s entrepreneurs.

Small businesses are politically, socially and economically diverse. While they want to be heard on the issues that are important to them, they are hardly monolithic in their views. Lee buys in to the false notion that small-business owners are lockstep in their support of policies — a view unscrupulous lawmakers and lobbyists have spent a long time trying to foster.

Let’s debunk his points:

•He calls small businesses “just another special-interest group with an agenda — whether social or economic.” Small businesses too often find their needs being subordinated to those of big business. For example, the tax loophole that allows big businesses to relocate their base overseas to avoid taxes allows large companies to undercut small businesses on cost — an enormous advantage. Yet, when it comes to remedies, politicians often claim small businesses would be hurt by the very changes that would fix it. Why? It all comes down to money. In the 2014 midterm elections, deep-pocketed corporations, and the special-interest groups they support, shelled out hundreds of millions of dollars to elect candidates to office who might push policies that help their bottom line. But small businesses have limited resources, which means they can’t compete with large businesses when it comes to campaign donations. Sure, politicians love to tout their small-business support, but in reality that support has become little more than a feel-good bromide they use to check a political box.

•He also gets it wrong when it comes to small businesses’ impact on the economy. Lee argues that the long-held belief that small businesses are our nation’s biggest job creators has been misrepresented. To that we say, small businesses represent more than 99 percent of employer firms. They employ half of all private-sector employees and they pay around 40 percent of the U.S. private-sector payroll, according to the Small Business Administration Office of Advocacy. And last year, ADP Research Institute found small-business job creation outpaced that of big businesses — a trend that isn’t unique to 2014.

Frankly, it’s counterproductive to attack the potential of a powerful economic force that can help bolster the economy as a whole. Small Business Majority’s opinion polling found 82 percent of small-business owners already pay more than the minimum wage and 55 percent offer health coverage to their employees — even though 96 percent have no obligation to do so under the new health care law.

Small employers recognize the importance of nondiscrimination policies because they help companies attract and retain bright employees and because it’s simply the right thing to do. In fact, the majority of small businesses support enacting federal and state policies protecting all workers from discrimination, regardless of sexual orientation or gender identity.

It’s unproductive to try to downplay our nation’s job creators as just another group lobbying politicians for their special interests. Instead, take issue with those trying to appropriate small businesses’ good name in an attempt to gain political points and pass harmful policies. Let’s give our nation’s entrepreneurs the respect they deserve.

John Arensmeyer is the founder and CEO of Small Business Majority. Claudia Viek is the CEO of the California Association for Micro-Enterprise Opportunity.

VEDC – 36 Deals per Staff

Brandon Napoli, VEDC“We have an operational plan that has helped us gain efficiency,” says Brandon Napoli, Valley Economic Development Corporation’s Director of Microlending. “We have agreements on who does what and how long each step should take. We can monitor when things get off track.”

With this operational plan in place, VEDC’s micro loan program has surpassed all its California CDFI peers in staff efficiency. They averaged 35.5 loans closed per full-time equivalent (FTE) staff person last year – with little automation. “We’ve had a pretty manual process up to this point,” says Brandon.

VEDC has become the largest non-profit business development corporation in the metropolitan Los Angeles area. Their programs include:

  • SBA Women’s Business Center
  • San Fernando Valley Financial Development Corporation
  • Pacoima Development Federal Credit Union
  • Los Angeles Business Source Center

With a staff of 8.5 FTE in the microloan department (including 3 underwriters and shared support staff), Brandon’s team closed 302 deals last year for a total of $2.3 million and will close about 270 this year. Their total portfolio is $4.6 million. They have one product: a microloan from $1,000 – $50,000, with a term of 3-5 years and a rate of 7.75 to 9.75%.

Each staff person defines weekly goals and the department defined a process that guides how often, how quickly and on what basis to talk with an applicant:

  • a quick assessment of an application,
  • a call to the borrower the next day to request documents,
  • two days to underwrite once documents are received, and
  • then approvals the same week.

“We try to only contact each borrower twice,” says Brandon. Their approval process operates like clockwork every week. Brandon can approve deals up to $10,000. He has Tuesday and Thursday meetings with his supervisor to approve deals between $10,000 – $25,000. For deals greater than that, there is a two-day approval turnaround from VEDC’s CEO Roberto Barragan.

Brandon’s lending staff has the benefit of an in-house business training program run by VEDC. His team trains the business technical assistance staff, who help with applications by gathering documents and working on other business development needs of borrowers. Brandon estimates that half of their deals come through or are assisted by the training program.

Brandon feels that their success is due in part to good messaging and communication to prospective borrowers, so clients know what is expected. The application, which comes with a welcome letter and examples of success stories, is two pages. The application, a credit report and a couple months bank statements is all the VEDC underwriters need to quickly assess the loan on the client’s ability and willingness to pay it back.

VEDC isn’t resting on their impressive efficiency. This year they plan to further automate their system by creating a customized CRM system to track each applicant, import bank statements and generate documents automatically. In addition, VEDC is talking with FundWell, an online marketplace that pre-qualifies applications and matches them with lenders. FundWell presented at CAMEO’s January 2015 Microlending Forum.

With the additions of a fully integrated CRM system and FundWell feeding the pipeline with pre-qualified deals, we are looking forward to learn what VEDC’s microloans per staff will look like in 2016.

Brandon Napoli is the Director of Microlending for VEDC. VEDC’s mission is “to create and sustain jobs and businesses in our communities by providing high quality small business services…to enrich communities by making small business dreams a reality.”

Micro Lending Academy: Loan Capital Projection Worksheet

Loan Capital Projection Worksheet

CAMEO has developed a tidy spreadsheet tool to project how much loan fund capital you will need based on loan volume, interest rate and loan loss. On this webinar you will receive a copy and see how it works. We’d like to get your feedback as well, to see if we’ve structured it to meet your loan fund operational needs. Our microlending guru, Susan Brown, will host. This MicroLending Academy webinar is appropriate for all lenders or technical assistance providers who are thinking about a loan program.

Watch and listen to the Webinar (39 minutes)

About the Presenter

susan-brownSusan Brown‘s job is to provide you with facilitation, guidance, information, support and collaboration to make your work effective, connected to your values and aligned with your goals. Economic justice and values-driven economic development have been her primary focus during her entire professional life.  She brings these long-standing passions to her work along with an eclectic set of life experiences to provide a mature, in-depth perspective to individual and organizational change and growth.

Excellence in Microlending

The MLA newsletter is chock-a-block with articles, resources, technology, success stories, interviews, and big picture ideas on all Lending Academy features. This edition revolves around excellence in microlending.  What are the key factors of success? What are standards of practice for California microlenders? What can we do to scale microlending to meet the unmet demand resulting from banks scaling back their small dollar loans?

In this Issue…

  • Excellence in MicroLending Step One – Assessment
  • Success Story:  Accion San Diego – Combining Growth and Mission
  • MMS Update: Who are the Borrowers?
  • Best Practices: Impact Investing to Scale Up Microlending
  • Research:  Who Are the Credit Invisibles
  • News

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Excellence in MicroLending Step One

 1000947586CAMEO’s long-standing commitment to building California’s microlending sector is the force behind many of our recent programs:  Kiva and Accion Texas partnerships, the training series last October, Claudia’s many successes in building resources for lending, to name a few.

Our latest program, Excellence in Lending (EiL), focuses on the program elements needed for a high-quality loan fund poised for growth.  Using Kiva’s Field Partner metrics as a starting point, we created an assessment that will be the basis for a rich discussion at our 2015 MicroLenders Forum at the Federal Reserve Bank of San Francisco this week – January 15.  Fifteen lenders filled out the survey and we’ve compiled the aggregate data.

At the Forum, we’ll be asking participants what they think of the results.

  • Are there areas that the industry as a whole should address or improve?
  • Are there areas where establishing performance metrics make sense?
  • What needs to be in place for a CDFI to successfully scale up to, say, 200 loans per year?

Read Susan Brown’s blog post about what the assessment measured and what topics showed a wide variety of standard of practice.

Success Story: Accion San Diego – Combining Growth and Mission

1000947586And speaking of excellence- last edition we looked at the three lenders – Opportunity Fund, VEDC and Accion San Diego – who make up 75% of loans made by the CAMEO network of microlenders.  Over the next few newsletters, we’ll profile those organizations to see how they grew.

Our first interview was with Elizabeth Schott, CEO of Accion San Diego and CAMEO’s board president for 2015.

“We have averaged 15-30% portfolio growth over the past several years and project continued growth rate for the next five years…. We don’t just make loans. We change communities and local economies,” says Elizabeth Schott.

Susan Brown asked Elizabeth what were the key elements that set the stage for this success in her latest blog post.

Technology: MMS Update

Who Are the Borrowers

Three new members are joining CAMEO’s MMS project in 2015 for a total of seven particpating organizations: Mission Economic Development Association (MEDA), the Economic Development & Financing Corporation of Mendocino County, and Fresno CDFI (thanks to generous funding by Union Bank.)

The Accion Texas staff will also rollout a much improved online application. The new version is streamlined and easier for borrowers and loan officers to navigate, and is now available in Spanish as well as English. Entrepreneurs who are interested in applying for a loan can visit CAMEO’s California Microlending Online page for more information.

Now that we have a year of data, we’re wanted to know what MMS borrowers looked like. MMS offers a robust set of demographic tools, and CAMEO will be taking fuller advantage of these program features in the coming year.  Check out Andrew’s blog post that summarizes who the MMS borrowers are.

Contact Susan Brown if you’re interested in learning more or participating.

Best Practices: Impact Investments to Scale MicroLending

Access to reasonably priced capital for entrepreneurs who can create opportunity for low-income communities is a well-know problem.  The CAMEO network and other microlenders who do provide good terms for small dollar loans are handicapped in the sense that many times these loans are not profitable.   Joyce Klein, Director of the Aspen Institute Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination (FIELD), wrote about the “opportunity to use impact investment to build the strength and scale of market relevant, mission-driven lenders” in a recent Aspen publication.

Research: Who are the Credit Invisibles?

About 54 million people in the United States have no credit standing, i.e. they are “credit invisibles (video).  This means that their economic behavior is outside what the three major credit rating agencies measure, not that they don’t participate in the economy.  Maybe they’re renters who pay phone bills and utilities – but those activities aren’t looked at by credit agencies.  This article examines different efforts by nonprofits, government and social enterprises to bring visibility to the credit invisibles.

In one such effort, Credit Builders Alliance and Experian analyzed the impact of loan repayments being reported to them by CBA members (nonprofit lenders) with positive results.  However, microlenders can use more assistance to help report to the credit bureaus.

News