Accion San Diego has added three counties to its service area: Imperial, San Bernardino and Riverside. Elizabeth Schott, CEO of Accion San Diego said she decided to expand because she saw a need.
“Our organization was approached by other partners working in the small business space in those counties- bankers, government agencies, nonprofits, chambers of commerce, and other community partners. They all expressed a strong demand for microlending activity, but said there was not a whole lot of supply.”
When Elizabeth went to her board of directors, they were supportive to investigate the opportunity to see if a gap in the market existed. If it did, she mentioned, “it’s our responsibility to work with partners to fill the need and serve more entrepreneurs.”
She conducted a basic feasibility study which included interviews with small business owners and community partners in the small business space in the three counties. The study demonstrated that access to capital was a need and the community partners didn’t have resources of the type that Accion could offer. Sure there were some small programs such as several city-sponsored revolving loan funds, but nothing at a larger scale.
Some of the responses from the small business owners sound familiar. They included limited options for access to capital, especially if the business was new or in a business like a restaurant. Businesses struggled during the economic downturn and were starting to recover, but traditional banks were not an option for many of these businesses..
When considering ways to service the need, Elizabeth decided that the initial expansion should be in Imperial County, as it was the closest geographically, they had great community partners already established and lending options were very limited. She applied for Community Development Financial Institution (CDFI) certification for that county and received an award of $880,000 m the CDFI Fund in 2014 to support expansion in San Diego, as well as the new region of Imperial County.. She was ready to lend.
In the meanwhile, she raised operating dollars and programmatic funds and built relationships in all three counties through stakeholder meetings. In each of the three regions, she brought together 30-40 partners to introduced Accion and gather feedback from people on ground most familiar with their communities’ needs. Together they developed different partnerships and initiatives.
“The partners were very welcoming and collaborative, and we worked collaboratively to brainstormideas on how to work together,” said Elizabeth. “We didn’t want to reinvent the wheel, but collectively maximize resources.”
Her efforts have paid off. In the last four months of 2015, Accion made 10 loans in Imperial Valley. Their average loan size is smaller than in San Diego, an average of $5,000 versus $10,000. She also thought that they’d be making more agricultural-type loans, but so far, they’re seeing types of businesses as to what they see in San Diego. Her goal for 2016 is an estimated 40-50 loans. She’s super excited to hire her first business development officer in El Centro any day.
Accion starts lending in San Bernardino and Riverside counties in January, where she will use current staff, but is recruiting for two more business development officers for those counties. Her goal is to have them onboard by April 1. Her goals for those two counties are similar, and she expects about 70-80 loans in 2016, accounting for an April start date and a learning curve for new hires. Both counties have Individual Development Account (IDA) programs with a match. Accion hopes to funnel those IDA participants who want to start a business into Accion’s loan program.
She doesn’t plan to open an office in these regions. Employees will likely be based in a partner’s office, a similar model to what she does in San Diego. SCORE and the SBDC both have a physical presence in Accion’s San Diego office. It works well.
“What’s been really fun is that we’ve been able to work with more CAMEO member because we’re going outside our San Diego roots. We’ve been working more closely with Michelle Skiljan of the Inland Empire Women’s Business Center and Vincent McCoy of the Small Business Development Center (SBDC). We’ve made new partners, such as the Imperial Valley SBDC.”