1. Microlending Methodologies: Breaking New Ground with Banks Presented by: Marisa Barrera ACCION New Mexico October 10, 2006 Dallas

2. ACCION New Mexico Overview  Statewide non-profit organization dedicated to helping emerging entrepreneurs realize their dreams and be catalysts for positive economic and social change.  Offer credit from $200-$50,000.  Since 1994, financed the start-up and/or growth of more than 2,145 microenterprises through some 3,576 loans totaling more than $19 million.  Local, independent licensee of the U.S. ACCION Network.  Based in Albuquerque.

3. Catalyst for Innovation Challenge: How to achieve cost-effective statewide reach given NM’s large size & small population? Goal: Formulate a methodology that allows for significant increases in scale in terms of clients served and service area while also delivering gains in self-sufficiency. Innovation: Get banks in target communities to serve as ACCION “field offices”—informing potential clients about the program, assisting with applications, and closing ACCION loans.

4. Benefits of the Model ACCION New Mexico  Increases program capacity, efficiency, and scale.  Contributes to greater mission fulfillment. Banks  Positive Community Reinvestment Act impact.  Increased community goodwill.  New point of entry to nurture microenterprise and cultivate customer loyalty. Clients  Access needed credit quickly within own community.  Establish working relationship with a local financial institution.

5. Reaching for Scale  Since ACCION NM launched its collaborative lending with banks in late 1999, the initiative has grown to include nine bank systems representing 41 bank offices in 31 communities.  In 2005 approximately 53% of the 479 loans disbursed by ACCION NM went to entrepreneurs outside of Albuquerque.  ACCION’s loan portfolio increased from just over $400,000 at YE ’99 to $8.5 million at YE ’05. Portfolio quality has remained comparable.  Over the same period, financial self-sufficiency went from 19.4% to 67%.

6. Implementation Lessons  Secure and maintain buy-in at the bank leadership level.  Continually cultivate and sustain awareness of the partnership at the branch level—sharing success stories is key to relationship mgt.  Create recognition events and opportunities to reward and motivate participants.  Understand bank incentives beyond CRA such as increasing customer loyalty, cultivating future business, differentiation in a crowded market, and enhancing community goodwill.  Make it as easy as possible for the partner bank.

7. Looking Ahead…  ACCION NM has designed and tested an exciting microcredit delivery innovation—building a system of commercial bank partners to cost- effectively deliver ACCION loans to entrepreneurs across a statewide area.  This collaborative lending system holds promise for U.S. microcredit programs to significantly increase program efficiency, scale, and impact.