"It's really about the character of the business owner and his or her ability to make the business grow," she says.
The commitment through the NYSE Big StartUp is not targeted at specific industries, she says, "but there is a great interest on the part of the NYSE to generate jobs, so in this program we are reaching out to businesses that have been referred to us by banks that are viewed as highly likely to increase the number of employees they have. That's a very standard way for us to operate but it is the commitment to the NYSE Big StartUp to pay specific attention."
Even with creditworthy businesses, banks have shied away from small loans, primarily because the time and cost to do business is not worth it to them. Larger banks typically characterize "small businesses" as companies with 100-500 employees.
"That's not our focal point," Harman says.
Accion typically makes loans up to $50,000, with the average loan around $13,000 across the U.S. Harman says that as the economy recovers slowly, the organization has been making larger loans at the request of the SBA "as a way to get those dollars into the community where banks are still reluctant to lend." Loan terms average two years, however the larger the loan, the longer the terms.
Similar to bank loans, business owners who apply for the microloans need to have their financial house in order, but Harman says the most important part of the application really stands with the business itself -- is the business financially viable?
Small businesses that are looking for loans "need to demonstrate they are in a financial position to take on debt," Harman says. We want to lend "in a responsible manner so the business improves as a result of the loan rather than loses whatever equity or asset they build up. That's criteria of critical importance to Accion."
Alex Rein and Zach Silverman, co-founder of
Kelvin Natural Slush
got a loan from Accion this past spring to expand their food truck business.
Rein says he thought of the idea for essentially a natural ingredient Slurpee after he was laid off from his corporate law job in 2009. The partners initially raised money from friends and family and used personal savings to launch the business.
With two trucks and a growing wholesale business to local bars and restaurants, the pair switched to finding a loan to finance further expansion. With the $30,000 loan they received from Accion, Kelvin Natural Slush plans to open a third cart in another part of the city this coming sprint. The partners plan to continue their wholesale plans as well.
"For our business we're buying hard assets. The cost associated for the machinery and the carts are relatively high I guess, but once they're open they start kicking off income to cover the loan so debt is a way to finance our growth," he says.
This is not Kelvin Natural Slush's first experience with getting a loan. Rein says they had a prior bank loan, but the process was much more complicated.
"We thought the process was fairly easy, relatively speaking. We had applied for other loans in drips and drabs, where they kept asking for extra documents. Accion did a very good job. It was very straightforward and fairly user-friendly," Rein says.
-- Written by Laurie Kulikowski in New York.
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