This newsletter is chock-a-block with articles, resources, technology, success stories, interviews, and big picture ideas on all Lending Academy features. This edition revolves around the disruptive changes that are popping up on a regular basis and providing challenges and opportunities for our sector.
In this Issue…
- State of Microlending, June 18 Meeting with CDFIs
- News: Alternative Lenders Abound
- MMS Update: Working Solutions Adoption and Growth
- Dealing With Disruption: Revenue-based Lenders
- Best Practices: Small Dollar Credit Tool
- Success Story: Pedro Zerpa, Fusion Peruvian Grill
- Training Opportunities
State of Microlending, CDFI Meeting June 18
Wells Fargo, CAMEO and number of California CDFIs gathered in Sacramento on June 18th for a dynamic conversation about the state of microlending in the Golden State. Hosted by Wells Fargo’s Community Development Manager Tim Rios and co-sponsored by CAMEO, the goal was to identify challenges and solutions to expanding CDFI lending activity. CAMEO and the Wells Fargo Community Development team were there to ask questions, listen and gain understanding of the needs of California’s CDFI community.
- Tech’s next disruption? Small business loans – New, non-bank lenders are using technology to take complexity and time out of small business loan making.
- Know the True Costs of Short-Term Online Loans – Ami Kassar of MultiFunding writes that hundreds of companies are selling high interest business loans.
- Who are All These Borrowers? Lending Club looks at who borrows from peer-to-peer lenders.
- Small Business Loans: Should The SBA Make Room For Alternative Lenders?
- Opportunity Fund produced a nice visual breakdown of the small business lending landscape.
Technology: MMS Update –
Disruption Necessitates Change
Working Solutions understood early that the onslaught of new online lenders meant that they’d need to do something to compete. So they joined CAMEO’s Microlending Management System (MMS) last year and are on track to double their number of deals this year.
Susan Brown talked to the organization’s executive director, Emily Gasner, and reports that Working Solutions gets a gold star in adopting MMS, but there were some bumps in the road that they had to overcome.
To learn more about how MMS can help make you more competitive with new online players, contact Susan Brown!
CAMEO thanks Rabobank for understanding that microlenders face challenges and competition from new industry players. Rabobank supported us in the rollout of our MMS program.
Dealing with Disruption: Revenue-based Lending
The combination of online technology and investors who seek higher returns has created a flood of online business lending companies. Navigating the space is challenging, even for an experienced borrower. Rates, loan structures, fees, terms, etc can be hard to discern from the websites. To that end, we will try to keep members up-to-date with current trends. CAMEO wants to provide you – our business development and training professionals – with this information so you can help your clients determine which funding opportunities are most appropriate.
This month Shufina took a look at revenue-based lenders – those lenders whose repayment structure depends on revenues and receipts – one subset of small-capital, short-term lending that takes careful analysis to understand.
Best Practices: Small Dollar Capital
The Center for Financial Services Innovation published a new guide – The Compass Guide to Small Dollar Credit.
CFSI convened a network of expert advisors to develop a set of guidelines and best practices for high-quality small-dollar credit as part of their Compass Principles program. The Compass Principles are aspirational guidelines to assure quality innovation and execution in financial services – services that enable people to transact, borrow, save and plan in ways that are beneficial to the consumer and profitable for industry.
Even though these guidelines are for consumer credit, the recommendations apply to small-dollar business credit. The guide can be used as a framework for assessing your product and as a tool for training your staff and clients.
Success Story: Pedro Zerpa, Fusion Peruvian Grill
Pedro Zerpa ran his restaurant, Fusion Peruvian Grill, for three years, when he realized that he could increase his bottom line by adding a bar. He obtained the liquor license, but needed money to build out a bar area. Due to some past credit problems, Pedro was not eligible for a bank loan. He had his loan check in hand nine days after Working Solutions’ MMS loan system approved him.
Training Opportunities: 10,000 Small Businesses Financing Initiative
OFN and Goldman Sachs have committed to helping mission-driven small business lenders grow to better serve small businesses by launching the Goldman Sachs 10,000 Small Businesses Financing Initiative. This program kicks off with three identical workshops offered by OFN across the country, starting in late July.
The curriculum combines innovative approaches to marketing, culture, technology, operations, and leadership with elements of the Goldman Sachs 10,000 Small Businesses program for entrepreneurs adapted for small business lenders. We here they might waiting-list only.
CAMEO’s Individualized Learning Program for Trainings and Professional Development can be used to partially defray trainings, workshops and events that help develop leadership and improve operations of our member organizations. Learn more on how to access this member benefit as well as other training opportunities.