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At Accion, we're committed to bringing affordable microfinance solutions to small business owners who need them. We're an organization with a nationwide reach that has helped thousands of small business owners grow and thrive. A recognized leader in U.S. microfinance, we help small business owners use microloans to build their businesses. We are part of the U.S. ACCION Network, the largest domestic microlending network, with over $272 million lent since inception in 1991. About the Accion/Smallknot Partnership Accion and Smallknot have partnered to create a revolutionary co-funding product that brings microlending and crowfunding together to provide a new funding alternative for small business owners. This partnership helps small businesses leverage crowdfunded capital on Smallknot to get access to loans from Accion and helps increase visibility of the business' campaign. How It works Small business owners apply for a microloan through Accion (loan requirements)and are prequalified for loans ranging from $500-$50,000 (average size $8,000). In order to improve and grow credit history and grow the visibility of the business, small businesses create a crowdfunding campaign on Smallknot and use the money raised to guarantee a larger loan with Accion. Once the Smallknot campaign has been created, Accion, the small business owner, and Smallknot promote the campaign. When the goal is reached, all or a portion of the money raised on Smallknot is sent to Accion who then disburses a larger loan to the small business owner. Once the loan is paid in full, Accion returns the cash collateral (money raised on Smallknot) to the business owner who uses it to continue to invest in the business. Why the Smallknot/Accion co-funding program? Co-funding with Accion/Smallknot helps build your credit history which is very important for small business owners who are trying to grow their business and eventually access higher amounts of capital. In addition to the business owner and Smallknot, Accion helps bring more visibility to the campaign on Smallknot increasing the chances of funding success and ultimately raising the visibility of the business itself. Once the loan is paid in full, the business owner has a cash cushion that can be used to further invest in the business.
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Boost Your Business with a New Kind of Localized Funding
Erica Dorn Community Development Manager, Accion
Ben RossenCo-Founder & COO, Smallknot
October 4th, 2012
Agenda
• Introductions
• Who are Accion and Smallknot
• Funding Products
• How to Prepare for a loan and for a crowdfunding campaign
• Group introductions
• Growing your business
• Questions
Who is Accion?
• Limited credit history
• Informal financial documentation
• Small capital needs
• High risk industries
• Under two years in business
• Flexible, community-based lender
• Cater to home-based business"I wanted to create a welcoming space for all," says Lyn, who began the studio with the help of her first ACCION USA small business loan two years ago. The business became profitable one year after opening and grew to employ twelve part-time employees. "Just as important," she continues, "I wanted to create work for myself that was fulfilling.“
- Lyn Genet Recitas, owner of Neighborhood Holistic in Harlem
Why Accion?
20% African American
Who do we lend to?
Friends & Family Crowdfunding PersonalSavings Equity
Credit Cards
ACCION MICROLOANS
BankSBA Loans
An overview of the credit continuum
Equity and Investments
Jesse, recipient of the Sprout Loan at ACCION, owner of Brooklyn Taco. Manhattan, NY
Jason, Accion client and owner of a home-based soap company
*Credit cards, Microloans and Bank Loans build a credit history.
Product Definition
Established Businesses(> 6 months)
Up to $50k
Emerging Businesses(> 6 months but not yet profitable)
Up to $30K with outside cosigner
Sprout Loan(< 6 months)
Home-based/incubator up to $5-*10K without cosigner
Products and ProgramsProducts and Programs
• Registered business owner
• Credit Score over 525 (FICO)
• No more than $3,000 in past due debt*
• No Bankruptcy in the last year
• No Foreclosure in the last 2 years
• No late payments on mortgage and rent in the last year
Natasha, Accion client and owner of Natasha Wozniak Jewelry. Brooklyn, NY
*Except The Sprout Loan, which cannot exceed $500
Basic Loan Requirements
What is Smallknot?
Smallknot is a crowdfunding platform that allows
anyone to fund a local businesses in exchange
for in-kind returns like goods, services and
special benefits.
Option 1: Raise Funding
Option 2: Build a Crowd
Benefits of Using Smallknot
• Inexpensive access to extra capital
• Build real customer loyalty and get word-of-mouth marketing
• In-kind rewards at a premium offer real value to customers
• Improve and connect with your community
• Keep money local
• We make it easy to activate your networks
Microfinance Meets Crowdfunding
Accion/ Small Knot Partnership
Build your credit history (bridge to accessing higher amounts of capital)
Increase the visibility of your business
Create a cash cushion for future investment into your business
The Accion/Smallknot Partnership
The Accion/ Small Knot Partnership
First Accion/ Small Knot Partnership:
A7
Brooklyn | NY
Hand crafted leather camera straps, made with care in Brooklyn.
Amount invested: $8,110 of $7,500
• Loan process: 5 to 10 business days* plus 30 days to raise on Smallknot
• Terms up to 60 months
• Optional auto payments
• Interest fixed rates: start at 8.99% average 11.99%
• 3-5% closing fee
• No prepayment penalties
• Payments applied to principle and interest
*Once all documents are collected
Affordable Loans
How to Prepare for a Loan
Credit Today: Scoring Systems
FICO is still the most widely used system among lenders. Scores range from 300 to 850.
New Credit
Amounts Owed
Types of Credit UsedLength of Credit History
Payment History
Key Strategies for Managing Credit
• Pay on time
• Keep a healthy percentage of available revolving credit
• Diversify your trade lines
• Pay credit cards down one by one
• Be proactive in calling your creditors
• Check credit reports annually for errors at www.annualcreditreport.com
• Use www.myfico.com to see a copy of your FICO credit score
Key Strategies for Managing Credit
Things to Consider: Coverage for a Loan Payment
• Can your business afford the loan payments?
• Is net income greater than 2x the loan payment?
• Can you afford to pay yourself and cover your personal expenses?
How much would my monthly payment be?
Principal Portion
$2,000 $5,000 $10,000 $20,000
Loan Total (including closing fee & UCC fee)
$2,130 $5,280 $10,610 $20,910
Term 12 24 30 40
Monthly Interest Rate
0.75 0.75 0.75 0.75
Monthly Payment
$186 $241 $396 $607
Things to Consider: Bank Statements
• Are deposits greater than withdrawals?
• Are there Insufficient Funds Fees (NSFs)?
• Are the balances declining or increasing over time?
• What are the frequent expenses?
Sample Personal Bank account analysis:
Example of your bank statement analysis
ACCION USA’s Products
• One-on-one: We provide coaching throughout the loan process on credit, cash flow and record keeping
• Online: Free webinars and a monthly newsletter help create meaningful connections with our clients
• Partnerships: We team up with other organizations to leverage resources and maximize strengths
More Than a Loan
Have More Questions?Contact Accion:
Erica Dorn, Community Development Manager
edorn@accionusa.org646-833-4533
Contact Small Knot:Ben Rossen , Chief Operating Officer
Ben@smallknot.com646-552-4654
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