1. Helping Our Clients Succeed

2. Opportunity Fund Small Business Program
$250K
$115M
Leading CA nonprofit CDFI micro-lender
Max loan size in CA
In responsible, alternative financing to underserved small businesses
$50M/yr 1%
Opportunity Fund helps underserved California small business owners grow by providing responsible alternative financing. We are a leading nonprofit CDFI with offices in San Francisco and Los Angeles, and our headquarters is in San Jose. By the numbers, we lent over $115M last year, with an annual run rate of over $ 50M. Our current portfolio is just over $50M. And, we have a very low 1% default rate. Our mission is to advance the economic well-being of working people by helping them earn, save and invest in their future.
Run rate
Default rate
Offices in SF, LA, San Jose

3. How Microfinance Helps
Mission: To advance the economic well-being of working people by helping them earn, save, and invest in their future.
Providing clients with small but meaningful loans and financial advice.
Helping clients grow their small business, increase income, and create jobs.
Building a foundation for economic mobility extending into the next generation.
At its essence, microfinance is small amounts of money and big amounts of time. This means we provide the personal touch, plus the time people need to make the transformation in their personal and financial lives.
Opportunity Fund was founded on the principle that a little seed money and the right financial advice can drive permanent and lasting change in the lives of Californians, building a foundation for economic mobility and helping working families get ahead.
Opportunity Fund’s Microfinance Solution:
Microloans to fund entrepreneurs
Micro-savings to fund college students

4. The Impact of Our Loans 90% 20% 3 Jobs $2 Business survival rate
Increase in business income
3 Jobs
Created and sustained per loan $2
Generated in local economy for every $1 invested
An Opportunity Fund microloan can change the life of a small business owner. Our clients are nearly twice as likely to survive as the national average. They make more money. They create and sustain jobs in their communities. And their success generates new economic activity in their communities, through new wages, spending, and taxes. Our impact numbers speak for themselves.

5. Challenges Our Clients Face
Cash flow management is a common challenge. Less responsible lenders do not consider cash flow requirements.
Small businesses fail primarily because they cannot access the right financing.
Banks, which prefer lower-risk, higher-value loans of more than $100K, are not meeting small businesses’ need for credit.
Our clients face many challenges that keep them from establishing or growing their businesses. Banks continue to tighten access to credit/financing, increasing the amount they’ll lend and increasing the requirements for who they will lend to. Small businesses fail because they are unable to get the financing they need. Our small business owners are passionate about what they do but may not always know how to manage cash flow – essential to keeping a business afloat and to grow. Alternative lenders are filling the gap. Some are transparent and responsible. They are up-front about their interest rates and cost of the loan – and make sure their clients can afford the loan and comfortably pay. Others are not, and therefore put the client in jeopardy of losing their business and livelihood –for example, payday lenders, merchant cash advance providers and some online lenders.
Alternative lenders fill the gap. Some lend responsibly – others are not the lowest, most affordable options for clients.

6. Business Financing of $150k or Less
MCAs and short-term loans have surpassed small SBA loans
Barrier of entry at banks continues to rise while SBA lending simply cannot fulfill the demand for loan request under $150k
As a result…
Bank lending is down
High-cost, short-term financing is targeting the gap

7. Where Business Owners are Going for Capital
% APR
% split
of sales
MCAs
100+ players
Size of lending
>70%
>20%
New Logic
AMI/CAN
55-70%
OnDeck
15-20%
IOU
40-55%
10-15%
Kabbage
25-40%
Square
AFFORDABLE CAPITAL
5%-10%
PayPal
Amazon
Lending
Club
10-25%
0-5%
Dealstruck
Up to 6 months
6-12 months
12-18 months
>18 months
Term

8. Comparison of Options Alternative Lending Opportunity Fund APR
Terms
~ 6 to 18 months
Up to 60 months
Out-of-pocket cash
Medium to high initial cash outlays
Low cash outlays No more than 10% of receipts in most cases
Risk
Medium to high
Cash flow
Credit card sales, bank deposits, or shipping
Description
Fixed repayment amount
Fixed monthly payment
May or may not be a loan
Affordable payments, no penalty for paying early
Term loan, helps establish/build credit
Main players
AdvanceMe, Inc., Can Capital, Dealstruck, Kabbage, OnDeck, Rapid Advance
The alternative lending landscape ranges from Merchant Cash Advance to Peer to Peer or Crowdfunding. Merchant Cash Advances targeting the highest risk borrowers and are the highest cost alternative financing options with short terms, and take a significant amount of cash “out of pocket.”
MCAs include Can Capital, Advance Me and Rapid Advance. Daily ACH while lower cost option offers longer terms with medium out-of-pocket cash requirement targeting medium risk borrowers.
Daily ACH providers include Can Capital and OnDeck. Short-term installment loans with fixed monthly payments, fix repayment amounts can cost 40–70% APR and have high out-of-pocket requirements like Kabbage.
Finally, Peer-to-Peer or Crowdfunding lenders provide fixed monthly payments and simple interest loans with interest rates greater than 20% APR and up to 18 months. They are lower out-of-pocket cash and target lower-risk borrowers. Lender example is Dealstruck.

9. Abusive practices we are concerned about
1. Lack of transparency
2. Unaffordable terms
3. Prepayment Cost
4. Debt Traps
There is almost no regulation of these loans at the state or federal level.
With Regulatory Silos – SB Owners slip through the cracks
Thus we helped to create/support the…
5. Double Dipping
6. Stacking
7. Broker Abuses

10. 1 4 2 5 3 6 Signed by 37 orgs, Including:
The Right to Transparent Pricing and Terms
The Right to Fair Treatment from Brokers 1 4
The Right to Non-Abusive Products
The Right to Fair Collections Practices 2 5
The Right to Responsible Underwriting
The Right to Inclusive Credit Access 3 6
Iosefa brings us home
Signed by
37 orgs,
Including:

11. Opportunity Fund Loans
Easy to get
Minimum documentation
No credit OK
Fast
Get cash in as few as 2 to 5 days
Affordable
No hidden fees
No prepayment penalties
Rates starting at 8.5%
Use slide only when meeting with ED, Program Director at Community Partner organization