Thursday, April 14, 2011

Micro-Loans for Social Enterprise: A Model from Toronto.

I participated in a Lunchbox Speakers Series webinar yesterday about Community Loan funds (a way for Social Enterprise entrepreneurs to access funding for their initiatives). There was a lot of great information on things happening in Toronto.



Two companies who represented some of these great ideas are:

 




ACCESS Community Capital Fund helps individuals without collateral or credit history obtain an affordable loan to improve their standard of living through entrepreneurship. ACCESS is a Canadian registered charity granting micro-loans where the abilities, skills and commitment of the applicant in conjunction with the strength of the business plan are key decision criteria.

    ALTERNA Bank has created community relationships with micro loan programs. They partner with ACCESS to help small business and social enterprise programs take the step up they need in getting started. They are a member owned co-operative lending institution who invests in their community. They do not simply lend money; they ensure the people receiving loans are also trained in money management skills. They match entrepreneurs up with a business development coaches, business enterprise consultants and aftercare mentors to ensure financial success for the borrower.
     
    The general philosophy with these lenders seems to be a “giving a step up” approach whereby the entrepreneur can receive $5,000 initially and then $10,000 if their business is progressing. These lending agencies are truly partnering with the community by developing their skills and staying involved in a close relationship with them to ensure their success.

    I was excited to see how these lenders were also focused on marginalized people who wanted to start businesses. Regardless of credit rating, if they saw a solid business plan and had a strong commitment to growth they were willing to assist.

    Carleton University participated in a study with these agencies which showed that 62% of micro loan participants for social enterprise were women, 75% only needed one small loan to get started, 90% paid their loan back on time and 82% who used the money for startup were still in business today. They also found that this program improved business owner’s living environment (27% became first time home owners), it increased economic status, financial stability and nutritional habits. Overall, these micro loan programs are improving the lives of people in the community.

    I was impressed!


    If you are a nonprofit leader, social entrepreneur or local business and are interested in more information about social enterprise please contact me. 
    Thanks!! 
    Chris

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