MICRO-CREDIT USA 2009MICRO-CREDIT USA 2009Mark Pomerantz, Seattle UniversityMark Pomerantz, Seattle University

The ProblemThe Problem

Lack of Bang for the BuckLarge expenditures of money, effort, and energyLow outcomes of successful long-term businesses as measured by

Increased business and client revenueNumber of client businessesSustainability of client businesses

Old Paradigm FixesOld Paradigm FixesIncreased use of Internet Resources

E-commerce platform on websiteFacilitation of development of and linking with client websites

Merging or Joint Operations with Another OrganizationPartnership Development and Resource Leveraging

Local Housing AuthoritiesState Micro-enterprise AssociationsOther Micro-credit Lenders

Client Screening for SuccessScreen out clients that seem to lack entrepreneurial attributes such as prior business experience and basic business or pre-business skills (daily living skills)Offer a basic skills training for these clients or refer them elsewhere

Improving Training ProcessNew training manuals and etc.

NewNew ParadigmParadigm

New Model for micro-lenders serving dual clientele et al:

Individual participants

Group Businesses or Coops

Clients referred from other organizations

AdvantagesAdvantages

FlexibilityPotential for more positive client outcomesRecognizes market realitiesCost benefits

Potential to generate more earned incomeProgram Cost Savings (e.g., smaller core staff)Cuts down on high overhead of US micro-lenders due to small volume of borrowers and higher admin. costs than in developing world

(Chart of organizational model prepared by Kalpita Deobhakta)(Chart of organizational model prepared by Kalpita Deobhakta)

ED+

Board Exec

MICRO-CREDIT USA 2009MICRO-CREDIT USA 2009

Administrative “HUB”Board of Trustees (Works closely with ED, especially Executive Committee)

ED

StaffOperations Mgr.

Fund Development Mgr.

Gov’t and Biz Relations Mgr.

MICRO-CREDIT USA 2009MICRO-CREDIT USA 2009“RIM” Divisions - autonomous from parent agency-operated by third party(ies)?

Facilities Manages facilities, e.g., Microcredit Offices, Art Gallery, Commercial Kitchen, Retail StorefrontMay have other property management clients

Business Management and Technical Assistance Works with group businesses or coopsFacilitates group training, TA, legal, all start-up issuesProvides ongoing management support to group businesses (back room, accounting, strategic planning, etc.)May have other training clients

Training Provides business plan training to individual micro-businesses and borrowersCoordinates peer lending circles/groupsSolicits clientele from other organizations and small business owners

Bank Makes peer loans to individual borrowersMakes loans to coopsMakes market or non-collateral loans to other low-income or special needs groups

MICRO-CREDIT USA 2009MICRO-CREDIT USA 2009Micro-lender Client & Staff Relationships

CoopsExamples: Arts, Green Cleaning, Green Biz, CateringEach managed by a professional manager who is employee of “RIM” Facilities managed by “RIM”Oversight by “HUB” Operations Manager and EDJoint Marketing facilitated by “HUB”Able to access loans at “RIM” Bank

Individual Clients Similar to existing set-upAble to access loans at “RIM” BankTime limit on participation in peer lending groups based on number of loans taken and/or business successTraining managed by “RIM”, supervised by “HUB” Operations Manager and EDJoint Marketing facilitated by “HUB”

MICRO-CREDIT USA 2009MICRO-CREDIT USA 2009

Start-up IssuesContinuation of existing operations during start-up periodMarketing and partnership development for new modelModel refinement and development, e.g., should agency even make loans? Or should there be an umbrella lender?Approaching entrepreneurial funders for start-up capital: grants, PRI’s, deferred loans (e.g. GoodCap, Calvert Social Investment Foundation, private social investors/donors, other mission-oriented below market funders)

MICRO-CREDIT USA 2009MICRO-CREDIT USA 2009

Start-up Costs for Group BusinessesInventory of Business SuppliesFacility RentalMarketing and AdvertisingTechnical Assistance

Outside training on green cleaning, green businesses (solar panel recycling etc.)Assistance with accounting services, legal assistance, benefits packages and identifying cost-saving opportunities.

MICRO-CREDIT USA 2009MICRO-CREDIT USA 2009

Green CleaningGreen Cleaning

Similar ModelsSimilar ModelsWAGES’ worker-owned green biz coops (LLC’s)

WAGES provides all the services necessary to launch and manage worker cooperatives owned by low-income women. (Training, Management, Marketing, Legal, etc.)WAGES helps each cooperative develop business plans, access start-up loans, accounting services, legal assistance, benefits packages and identify cost-saving opportunities. Total assistance was offered for a two-year period, after which the business would operate independently.Each coop after start-up period has a full-time manager, selected jointly by members and WAGES who becomes a WAGES employee.

Similar ModelsSimilar Models

Zingerman’s Deli (ZCoB)

•Zingerman's Community of Businesses •Each with own specialty and identity. •Internal entrepreneurship encouraged and supported, •Ideas for growth encouraged that fit within Zingerman’s defined business culture•All designed to enhance the quality of service offered to Zingerman's customers• All designed to improve the financial performance of ZCoB and its components. •Hybrid of the co-operative and partnership models •ZingTrain, provides customer service training, seminars and consulting for range of businesses, many outside the food industry.•ZingNet provides central administrative services