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The Idea
In the early 1990s, ACCION International, an organization known for its efforts to help people help themselves through successful microlending in Latin America, wanted to see if its concept could also work in the United States.
Could it lift people out of poverty more effectively than traditional charitable giving? Its leadership tested the idea successfully in New York and then took it to four heavily Hispanic cities – Albuquerque, Chicago, San Antonio and San Diego -- working with community and financial leaders in each city.
In San Antonio, there was enthusiasm from the start. Al Martinez-Fonts, then chairman of the Greater San Antonio Chamber of Commerce and president of Chase Bank, got the ball rolling and Frost Bank, Wells Fargo, and Broadway Bank stepped up to the plate, offering $125,000 at zero percent interest to support such a loan program if it took off. A $50,000 grant for operations from Levi-Strauss quickly followed.
The next step was to find an executive who combined a sense of social responsibility with business acumen. Janie Barrera was the perfect fit for ACCION Texas.
The early years
In March 1994, the 501(c)(3) was established, and three new staff members joined Janie, creating the ACCION team. ACCION Texas made its first loan in June 1994. The new ACCION Texas team believed that using ACCION International’s concept could change lives and reduce the desperate poverty of the communities in South Texas. They worked to secure additional grants from socially responsible foundations with a belief in the concept of “a hand up, rather than a handout.” The Meadows Foundation committed $500,000, and others soon followed.
ACCION provided vital funding, including working capital, to small businesses that, for various reasons, could not secure it through banks. The team rose to the challenge, working as loan officers, collectors, marketers and fundraisers.
With the inevitable – though few – delinquencies, the ACCION Texas team learned the value of technical assistance to help entrepreneurs manage their businesses and their funds – and how to find this support through partnering with community organizations. The team learned the value of building personal relationships with borrowers to ensure loan payback.
Over the years, ACCION has helped those small businesses – car lots and hair salons, restaurants and barbershops, builders, daycare centers, service companies and more – the small businesses that represent 89 percent of Texas employers. ACCION Texas' loans helped them buy their equipment and supplies, and other essential services and materials, as well as build the credit scores that would enable them to be "bankable" as they grew larger.
Loans were small -- $5,000, $10,000 – but they made a difference, and the clients came back for second and third loans as they grew their businesses.
For the banks that had committed support, the young organization was a godsend. Banks could refer loans that were too small or where bad credit made them high risk, and, at the same time, fulfill their Community Reinvestment Act requirements with their financial commitments.
The success
The organization grew quickly, opening small offices around Texas to meet the huge demand for loans, and continued to expand the San Antonio team. Would-be business entrepreneurs with great ideas began to call the organization that had put other businesses on their feet, helping them to be profitable and improving their communities with new jobs, and new products and services. The success stories are human and touching – and there are many of them. In 2009, the organization expanded its lending operations into Louisiana. Today, ACCION Texas Inc. is rapidly growing its footprint with offices in Arkansas and Missouri now in operation, and more coming within the next year in Alabama, Kentucky, Tennessee and Mississippi. It has:
• 10 offices in Texas, 4 in Louisiana, 2 in Arkansas and 1 in Missouri.
• More than 2,200 active clients with an average loan size of $11,102.
• Disbursed $116 million in loans since 1994.
• Made 12,000 loans since 1994.
• The ability to offer small business loans from $500 to $250,000.
• The ability to offer larger SBA 504 loans in Texas.
• A payback rate above 90 percent.
• The largest microloan portfolio in the United States.
The program has twice received an AAA CARS rating from Opportunity Finance Network, a membership organization of Community Development Financial Institutions (CDFI). ACCION Texas inc. has been recognized with an American Banker Innovator Award and won the coveted Wachovia NEXT award as the best CDFI among 600 with $50 million or less in assets. Winning this award was based on “community impact, bold and compelling mission, and potential for explosive growth.”
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