ACCION's Mission

The mission of ACCION International is to give people the tools they need to work their way out of poverty. By providing microloans, business training and other financial services to poor men and women who start their own businesses, ACCION's partner lending organizations help people work their own way up the economic ladder, with dignity and pride. With just a little capital, people can grow their own businesses. They can earn enough to afford basics like running water, better food and schooling for their children.

In a world where three billion people live on less than $2 a day, it is not enough to help 1,000 or even 100,000 individuals. ACCION’s goal is to bring microfinance to tens of millions of people – enough to truly change the world. We know that there will never be enough donations to do this. That's why ACCION has created an anti-poverty strategy that is permanent and self-sustaining.

Why Microfinance?

Most of the world's three billion poor people cannot find work. Where they live, few jobs are available and those that are often don't pay a living wage.

To survive, they must create their own jobs by starting tiny businesses or "microenterprises." To support their families’ basic needs, these “microentrepreneurs” make tortillas, sew clothes, mend shoes or sell vegetables in the street – anything to put food on the table.

Microentrepreneurs work hard – sometimes 18 hours or more, every day of the week. Yet with little or no capital to grow their businesses, they remain trapped in a cycle of poverty. To open their businesses each day, they often borrow from loan sharks, who charge as much as ten percent daily, or they pay higher prices to buy goods on credit. The result: their hard-earned profit ends up in the hands of others, leaving them locked in a daily struggle for survival.

What they need to break free is working capital – a loan as small as $100 at a fair rate of interest. Yet, in traditional banking, these microentrepreneurs are far from ideal clients: their loans are too small to justify the time and expense needed to administer them, and they lack the collateral and credit history required by traditional lenders.

That's why ACCION began issuing microloans 40 years ago. A small loan can cut the cost of raw goods or buy a sewing machine. Sales grow, and so do profits. With a growing income, people can work their way out of poverty.

Microfinance works because it builds on the one asset found even in the poorest communities around the world: the power and determination of the human spirit.

How We Work

Historically, anti-poverty programs have been unable to help more than a tiny fraction of the world's poor. There simply is not enough charitable money in the world, and there never will be. That is why ACCION is leading the effort to create a permanent answer to poverty. Unlike traditional charities and many other microfinance efforts, ACCION's programs are designed to cover their own costs.

It works like this: borrowers pay interest on their loans – enough to cover the expense of making a loan. In this way, each borrower helps finance the cost of lending to the next. The more people the program reaches, the more resources it has to reach even more people.

This focus on financial sustainability has helped ACCION's partner programs increase the number of people served from 13,000 in 1988 to 2.7 million in 2007. While it took twenty years for ACCION’s partners to reach their first million clients, it took just three more to reach their second million.

We now know that microfinance can both help the poor and be profitable. In Mexico, ACCION's partner Banco Compartamos now serves over 673,000 poor and low-income entrepreneurs. It is also the first publicly traded microfinance institution in Latin America, a testament to microfinance’s ability to reach capital markets funding. With access to the enormous resources available in the capital markets, microfinance has the potential to help the very people our financial system has traditionally left behind.

ACCION's goal is to make this potential a reality.

Who Are Our Borrowers?

In Latin America, the Caribbean, Africa and Asia, ACCION's partners work with poor, self-employed men and women who rely on microenterprise as their main source of income. These individuals range from the very poor to those who have some assets but remain marginalized from the mainstream economy and society.

ACCION's Latin American, Caribbean, African and Asian borrowers:

are among the region's poorest people at the time of their first loan
usually have no collateral
may not be able to read or write
may not have enough capital to open for business every day
are 65 percent women

In the United States, ACCION USA works with low- and moderate-income borrowers who have their own businesses but are economically marginalized and have no access to commercial business loans. They are often unable to afford formal training and frequently have no forum for forming business contacts or receiving peer support. They are single mothers on public assistance and storefront owners with small but well-established businesses. They are immigrants and people whose families have lived in this country for generations.

In the United States, microlending helps people leave welfare, rebuilds inner city neighborhoods and provides a valuable alternative for those left behind by factory closings and corporate downsizing.

ACCION USA borrowers:

are 61 percent Hispanic
are 27 percent African-American
are 40 percent female
are 55 percent low-income by federal HUD/CDFI standards (earning 80 percent or less of area median income)
often rely on their microbusiness for 50 percent or more of their family income
often have business assets of less than $5,000
often have no personal or business credit or have bad credit prior to receiving an ACCION loan

The ACCION Lending Model

ACCION's partner programs provide small, short-term loans at interest rates that reflect the cost of lending. ACCION’s loan methodology has been designed to both meet the needs of microentrepreneurs and to ensure that the microfinance organizations we work with are financially sustainable. Best of all, it has enabled our clients to work their own way up the economic ladder, with dignity and pride.

ACCION considers microentrepreneurs skilled business people, not objects of charity. Like traditional banks, ACCION partner programs evaluate potential borrowers using measurements like business assets – which could be as small as a tin stall in the market – amount and cost of goods sold, cost of raw materials, and household expenses. But unlike traditional banks, our partner programs do not make loans based upon revenue or collateral alone.

Because of the poverty of our clients, we send loan officers to meet potential borrowers in their places of work, where we also weigh intangibles like references from customers and neighbors, and the loan officer’s own “gut feeling” about the microentrepreneur's drive to succeed. This character-based lending allows us to go "beyond the numbers" and develop a more complete picture of a potential borrower than a traditional credit score.

Borrowers either apply for loans individually, or, if they lack physical collateral or a co-signer, they team up with a few other borrowers. Known as solidarity group lending, this method allows members to cross-guarantee one another’s loans in lieu of collateral. ACCION spearheaded this approach in the 1970s to help bring microloans to the poorest of the economically active population.

First loans start small – as low as $100 in Latin America, Africa and Asia, and $500 in the United States. Borrowers who repay their loans on time are eligible for increasingly larger loans. This process, called stepped lending, keeps initial risk at a minimum while allowing microentrepreneurs to carefully grow their businesses and increase their incomes.