Texas Microlender Steps Up For Entrepreneurs

By Hanah Cho
The Dallas Morning News.


Kimberly May credits microlender Accion Texas with rescuing her roofing business in 2007.

Three days after Bank of America approved a $40,000 line of credit, the bank rescinded it.

But by then, May had ordered materials for upcoming projects and sent out checks.

As luck would have it, on the day May got the news, she was at a trade show in Fort Worth, where she encountered an Accion representative.

Within seven days, May had a $50,000 loan.

“They saved my business at that point, and so then we continued to grow from there,” said May, founder and chief executive of WnR Inc.

San Antonio-based Accion Texas has been helping Dallas-area entrepreneurs who can’t get capital from traditional banks since 1999, five years after the nonprofit was founded.

Over the past 15 years, the Dallas office has doled out nearly $24.5 million in 2,022 loans.

Its lending peaked during the recession as banks scaled back before loan volumes returned to more normal levels.

In the past year, however, Accion’s North Texas market has increased its efforts with new leadership, additional funding and more marketing and outreach.

So far this year, the office has provided $1.47 million in 135 loans, already exceeding last year’s total volume.

Given its pace, it would not be ambitious to expect the North Texas office to double, or even triple, last year’s loan production, said Luther G. Branham, the local market president.

That level of loan production would bring the office near or above its lending peak of $3.4 million in 2008.

“The demand is not going down. It’s going steady or going up,” Branham said.

Accion also has access to additional capital through Goldman Sachs’ 10,000 Small Businesses, a nationwide program that launched in North Texas this year.

Accion Texas is one of the local lending partners for the program, which provides education and capital to small business entrepreneurs.

Branham joined the organization as the North Texas market president in September. His hiring was funded by a grant from banking giant Citi.

Accion Texas received the grant to build capacity and increase its presence in the region, said founder and chief executive Janie Barrera.

A major step was hiring a market president with banking and operational experience in contrast to the nonprofit’s traditional model of having just loan officers in various markets with management centralized in San Antonio, Barrera said.

“My marching orders are for Dallas to be as successful as San Antonio,” said Branham, who had served on the Accion Texas board when he was a banker in San Antonio.

San Antonio’s loan production represented $6.7 million of the nonprofit’s total $20.3 million in lending last year.

Accion Texas also serves seven other states in the Southeast.

Having Branham has made a difference, said Danny De Valdenebro, a business adviser at the Dallas office who provides training and guidance to clients.

“It was getting established leadership to unify the office. It gave us a sense of legitimacy,” De Valdenebro said.

Accion Texas provides loans from $500 to $250,000 for entrepreneurs to launch or expand their businesses. Entrepreneurs also have access to up to $5.5 million in Texas through the Small Business Administration’s 504 program.

Accion clients, many of whom are low- to moderate-income people and minorities, are unable to get capital from banks.

Sometimes, the businesses don’t have enough collateral or positive cash flow or have lower credit scores.

“It’s not that their ideas are bad or that their company is doing bad,” said Barrera, who oversaw Accion Texas’ growth into the largest microlender in the country.

“It’s just that traditional banking institutions are regulated and are for-profit organizations. As a nonprofit organization, we can take risks because we have learned how to mitigate risks.”

For taking on risk that traditional banks may not, Accion Texas charges a higher interest than the market rate.

Still, interest rates are lower than the 20 percent or more charged by payday lenders or other alternative sources.

Accion’s default rate is between 3 percent and 4 percent.

De Valdenebro and two loan officers helps business owners shore up their business plans, guides them through the loan application and provides one-on-one financial education.

Branham is looking to hire a third loan officer focused on the Fort Worth area.

“It’s about clearing those hurdles,” Branham said.

Besides hiring Branham, the North Texas office has used the Citi grant to increase its marketing through billboards and radio ads.

As part of the office’s outreach, the staff is working with banks, chambers of commerce and other entrepreneurial organizations to get the word out.

Some people on staff like De Valdenebro appear on Spanish-language radio shows to provide financial literacy and answer questions.

The additional presence is helping to reach new customers like Ivan Jimenez, who saw an Accion Texas marketing video on YouTube.

Jimenez received a $5,000 loan earlier this year for his business, Computer Networks in Dallas.

He used the money to increase marketing and expand into other business lines such as Internet and cellphone services.

Besides getting access to capital, Jimenez also made use of Accion’s business training webinars.

“Especially the money, it was a boost for our company,” he said.

For May, Accion Texas has been a partner throughout her company’s growth.

Besides the initial $50,000 loan, May said, she has turned to Accion Texas to get several $20,000 short-term loans to finance big projects.

WnR is a profitable company that generates more than $1 million in sales annually.

It has six full-time workers and a manufacturing plant in Kansas and works with customers such as Walmart and the University of North Texas.

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