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ACCION Microloan Program

ACCION Microloan Program. Kate J. Rogers ACCION Chicago. What We Do. Small Business Loans Loans between $200 and $25,000, average loan size $8,800 Serving start-up and existing business owners who are unable to access bank financing Technical Assistance Financial education

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ACCION Microloan Program

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  1. ACCION Microloan Program Kate J. Rogers ACCION Chicago

  2. What We Do • Small Business Loans • Loans between $200 and $25,000, average loan size $8,800 • Serving start-up and existing business owners who are unable to access bank financing • Technical Assistance • Financial education • Access to resources • Service Area • 11-county Chicagoland area

  3. Results • Mission Outcomes since 1994: • More than 1,700 loans disbursed totaling nearly $14 million to more than 1000 microentrepreneurs • 2007 Mission Outcomes: • 1,796 different businesses served with assistance and financing • 344 clients given formalized referrals to banking an technical assistance partners for financing, counseling, and other services • 113 loans disbursed to local small businesses • 327 jobs created or maintained (an average of 2.9 jobs per business) • 998,590 dollars disbursed

  4. Capacity/ Cash Flow Credit Capitalization Collateral Character/ Capability Conditions What Do Lenders Look For?Six “Cs” of Credit

  5. What should I do if my loan is rejected? Ask the lender these questions: • Why was I rejected? Get the reasons in writing. • Does this mean I’m turned down permanently? Or can I resubmit the loan request when I correct the problems? • Should I go to another lending institution? • Should I seek alternative financing? What are the alternatives? • Do you have any other suggestions?

  6. Alternative FinancingHow Do These Programs Help? These programs help support deficiencies in the “Six Cs.” They often… • Accept non-traditional collateral and/or co-signer in lieu of collateral • Enable extended payments to ease tight cash flow • Adopt less stringent credit history requirements • Encourage lending to businesses with limited financing history and start-up businesses

  7. ACCION Chicago ACCION Chicago is a private not-for-profit direct lending organization dedicated to providing credit and other business services to small business owners who do not have access to traditional sources of financing. By encouraging the economic self-reliance of microentrepreneurs throughout the Chicagoland area, ACCION Chicago strives to help businesses and communities grow.

  8. Terms and Products • Amounts • Loans for established businesses: $500 to $25,000 • Loans for start-up businesses: $500 to $15,000 • Credit Builder Loan: $200 to $2,500 • Products • Term Loans • Balloon Loans for contract/invoice financing

  9. Terms and Products • Terms • Up to 5 years, depending on loan purpose and cash flow • Interest rates • Fixed rate between 10.62% and 16% • Performance pricing available • No prepayment penalty • Fees • No application fee • One-time closing fee up to 5% of loan amount plus collateral filing fees, financed

  10. ACCION ChicagoEligibility Checklist • Operate business in the 11-county Chicagoland area? • Over 21 years of age? • Business industry must NOT involve: real estate development, not-for-profit organization, exporting, multi-level marketing or lending. • Loan purpose must NOT include: owner’s salary, down payment on real estate, or tax payments. • Current, with no bills past-due, on all active personal and business accounts? • Free of outstanding tax liens, delinquent child support, and active bankruptcy?

  11. ACCION Chicago Eligibility Checklist (Cont.) • Willing to pledge collateral (2nd or 3rd mortgage, vehicle and/or business assets) and/or a qualified co-signer? • For start-up businesses (less than 6 months revenue history): • Is current/outside income sufficient to cover personal bills, new business rent, AND an ACCION loan payment? • Personally invested at least 10-20% of loan amount requested? • Industry experience? • Ready with business plan (can be informal) and 12-months cash flow projections?

  12. …takes ≈15 business days! Online Application at www.accionchicago.org If pre-approved, gathering of supporting documentation Collateral inspection/ Site Visit Final Underwriting Review Presentation to Credit Committee Loan Closing ACCION ChicagoLoan Application Process

  13. Thank YouFor Coming! If you would like more information, please contact me at: Kate J. Rogers (312) 275-3000 x103 or kjohnson@accionchicago.org

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