MicroLending Academy Newsletter: Commitment to Scale

The MLA newsletter is chock-a-block with articles, resources, technology, success stories, interviews, and big picture ideas on all Lending Academy features. This edition focuses on capacity building and lists several opportunities for training, whether they be peer calls, webinars or tools you can use.In this Issue…

  • Success Story:  Opportunity Fund, A Commitment to Scale
  • A Banker’s Perspective: Fred Mendez, Union Bank
  • Excellence in Lending: Refining the Process for Efficiency
  • Best Practices: Cash Flow and Balance Sheets
  • MMS Update: Welcome Our Newest Lender
  • Research:  Crowdfunding by the Numbers
  • News


Success Story: Opportunity Fund, A Commitment to Scale

1000947586Earlier this month, Opportunity Fund announced a collaboration to grow responsible lending with Lending Club, the world’s largest online credit marketplace. With a seamless technology integration forged between Opportunity Fund and Lending Club, the potential for scale is unprecedented and the customer experience will be unparalleled.

In fact, Opportunity Fund has said that they want to invest $100 million in microlending over the next five years.  Susan Brown, our microlending guru, spoke to several members of the Opportunity Fund staff about how they are well on their way to accomplishing their goal.

A Banker’s Perspective: Fred Mendez, Union Bank

1000947586Fred Mendez, long known as a champion of micro business development and lending in California, recently assumed the position of Managing Director of Corporate Social Responsibility for the Americas for MUFG Union Bank, NA.  Prior to taking on this exciting new role, Fred ran the Community Development program for Rabobank for 8 years, creating a legacy of innovation in expanding small business lending in under-served rural regions.

Fred agreed to talk with Claudia Viek, our CEO, about his new job.  He was also willing to share his perspective on opportunities confronting CDFIs doing small business lending to LMI borrowers and why he thinks they should take more risk in this market.

Excellence in Lending: Refining the Process for Efficiency

1000947586Our Excellence in Lending program started with an assessment of operations and performance, and became the focus of our annual Microlending Forum in January.  We are following up with quarterly peer calls to discuss lending models and fine tune some metrics.

Our goal is to digest big picture topics important to our CDFI members: the frameworks, processes and goals that underlie programs and lead to greater success.  These calls are for the big picture thinker at each CDFI, to support greater competitiveness, volume and efficiency.

Brandon Napoli, Director of Microlending at VEDC, presented on how they close 300 deals per year with a modest staff and little automation.  Brandon has codified, in detail, all the steps in their lending process: who does what, how, and by when.  From packaging to assessment to underwriting to closing — VEDC is a well-oiled machine.  They can get a deal through their process in a week or two.  VEDC has also created a three-tiered incentive system, based on individual, team, and portfolio performance.  He said:

We cultivate a mission-driven, sales culture.  We strive to meet community needs by increasing scale while maintaining quality.  We don’t hide behind a non-profit orientation that doesn’t call for efficiency.

Other successful CDFIs will present their secrets to success at future meetings – Working Solutions, Opportunity Fund, Fresno CDFI, to name a few. Please RSVP for our next call on Wednesday July 15 from 1:30 – 2:30pm.

Best Practices: Cash Flow and Balance Sheets

Register for our last MLA Best Practice Webinar on  July 8 – Balance Sheets Part II.  You will gain an understanding of how management decisions impact the balance sheet so trainers can steer clients in the right direction.

You can watch the other three webinars in the series online (just click on the title)

  • May 27:  Cash Flow Projections will help you do projections and provides a format for teaching projections to business clients.
  • June 17:  Balance Sheet Basics is an introduction to balance sheet accounts, what they mean and how they work together.
  • March 11:  Loan Capital Projection webinar and the ‘Loan Capital Projection spreadsheet tool show you how to project the amount of loan fund capital you will need based on loan volume, interest rate and loan loss rates.

Technology: MMS Update – New Lender

A big hearty welcome to Economic Development and Finance Corporation of Mendocino.

John Kuhry, Executive Director of EDFC, was initiated into the wonders of LiftFund’s (formerly Accion Texas) Microlending Management System on May 13, 2015.  John wants MMS to underwrite his deals so he can focus on increasing capitalization and outreach.

EDFC has historically been a small business lender with an average deal size of $60,000.  They will be the first MMS user in the CAMEO group to use the system for bigger deals up to $250,000.  But he is also looking forward to building up his microloan portfolio, now that he has MMS to help.

Contact Susan Brown if you’re interested in learning more or participating.

Research: Crowdfunding by the Numbers

Dr. Richard Swart directs the research program in Entrepreneurial and Social Finance at UC Berkeley. He also is a partner and directs research for Crowdfund Capital Advisors, the world’s leading advisory firm in Crowdfunding and Alternative Finance.

He spoke at the CrowdFunding Beat Conference in 2014.  He shares his observations on crowdfunding activity and where the challenges and opportunity lie. His first observation is crowdfunding “is an extremely successful and viable way of funding low-risk equity investment into microenterprises.” Start the video at 4:00.

Also, the SBA recently published an Issue Brief – “Equity-based Crowdfunding: Potential Implications for Small Business Capital“.

Demystify crowdfunding with this primer.