Microfinance in the USA

May 9, 2011

As the so-called "credit crunch" cripples small companies nationwide, microlenders are "creating bright spots of economic mobility and small business growth." That's one of the messages going into the 2nd National Microfinance USA Conference, scheduled for May 23 and May 24 in New York City.

Another important message: it's time for consumer protection standards. "As microfinance continues to grow and mature, we must always keep our clients' best interest at the center of our work," says Michael Schlein, president and CEO at ACCION International. "This means creating products that are fair and transparent, and committing ourselves to strong consumer protection."

ACCION is one in an army of microfinance institutions that have endorsed the Smart Campaign, an international effort to make client protection a priority in microfinance. Microlenders ACCION, Kiva and Opportunity Fund, all co-sponsors of the 2nd Annual National Microfinance USA Conference, will use the forum to rally U.S. microfinance institutions around the Smart Campaign.

Microfinance in Action

While the economic outlook seems to have improved on Wall Street (as evidenced by recent earnings reports), Main Street businesses continue to struggle. Yet, ACCION and the microlender Opportunity Fund report business survival rates among clients double the national average and repayment rates that would make any Wall Streeter green with envy. The average loan size: just over $7,000.

"Small businesses create 64% of the new jobs in our country," notes Bob Annibale, global director, microfinance and community development at Citicorp, and a featured speaker at the upcoming conference. "It's clear that microfinance is meeting a critical need, enabling very small business owners to access capital, obtain valuable business training and move their way into the financial mainstream."

More than 140 microfinance experts will take part in over 40 conference sessions. But the highlight of the event is apt to be a tour of small businesses in New York that have benefitted from microloans. Business owners like Fauzia Rahman, who with loans from ACCION has been able to grow her food cart business to two locations and to hire help.

Microfinance has been getting a lot of bad press lately, especially in wake of problems in India and Bangladesh. The view of microfinance presented during Microfinance USA should help counter some of that.

Americans borrow about $40 billion a year from payday lenders

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