Combining Growth and Mission
Susan Brown, CAMEO’s microlending guru, interviewed Elizabeth Schott, CEO of Accion San Diego and CAMEO’s board president for the first installment of our series profiling California’s most prolific microlenders: Accion San Diego, Opportunity Fund, and VEDC. Here’s Susan’s profile:
We have averaged 15-30% portfolio growth over the past several years and project continued growth for the next five years…. We don’t make loans. We change communities and local economies. –Elizabeth Schott
This impressive growth is combined with her commitment to a high-touch lending process that amounts to “more of a movement than a set of transactions.”
Accion San Diego is a member of the Accion Network, worldwide leaders in micro-enterprise development. Launched in May of 1994, Accion San Diego’s mission is to create economic opportunity for primarily low-to-moderate income business owners who lack access to traditional sources of credit. Through business loans and support services, the lender strengthens the roots of emerging entrepreneurs and helps them to thrive in their communities, creating social and economic change.
Accion offers two main products to entrepreneurs in San Diego County:
- The Quick Loan, $2,000 or less, has a 48 hour turn-around time.
- The Complete Loan, from $2,001- $75,000, has a turn-around time of approximately 2-3 weeks.
They closed 209 loans in 2013, and will close around 270 in 2014, with an average loan size between $11,000 – $12,000 and a current portfolio of $4.4 million. Their self-sufficiency ratio (percentage of operating expenses covered through earned revenue) has increased from 38% in 2007 to approximately 60% in 2014.
Schott saw an opportunity to meet increased market demand in 2008-10 — when banks tightened lending to small entrepreneurs. This has become an ongoing strategic objective. She notes three organizational pillars she has pursued to support this objective:
Increased focus to raise program revenue and loan capital. A growing portfolio, along with 10%-19% interest rate, has provided increased earned revenue to support operations, as reflected in their nearly doubled self-sufficiency ratio. Schott has also focused on building successful and diverse relationships with key stakeholders and funders providing a broad base of grant revenue for operations and programs. As for increasing their loan fund capitalization, ASD has received four back-to-back CDFI loan fund grant awards.
Investment in technology and infrastructure. ASD has upgraded their portfolio management system to offer more-detailed, real-time reporting which informs management and outreach decisions. In addition, the staff, now out-fitted with remote technology (smart phones and laptops), are not tied to their desks, but rather spend their time in the field generating deals while still responding to new inquiries, answering borrower questions and gathering loan documents. ASD is also participating in a pilot with the Accion Network to automate some of the assessment and underwriting process, “without losing the personal touch” so critical to their mission. This in-the-field approach combined with remote technology generates high productivity, with approximately 17 deals closed per FTE staff member in 2014.
Investing in The Team. “We have invested a lot in our people, which has a direct correlation to our growth,” says Schott. ASD provides all staff flexibility accessing training opportunities for professional growth. They have restructured their staffing to provide career ladders within ASD and they plan to continue building this as future growth occurs.
“People can join ASD at an entry position, and see a next step for their career path within the organization,” says Schott. They also invest in ongoing, bottom-up team building activities, offering opportunities for staff at all levels to design and lead activities to build employee engagement and highlight those who have gone above and beyond. “Managers underestimate the power of small things that can lead to an increase in productivity and retention of valuable staff.”
a next step for their a career path within the organization for themselves right here,
When asked what she sees as important future focus for the CDFI microlending industry, Schott notes, “We have to invest in tracking data capacity to demonstrate our effectiveness. I can’t tell you how often funders comment that they love to see all the results we pack into our annual report. This is what will set us apart when competing for future funds.”