- Low interests rates
- Small loan amounts ($500 - $50k)
Accion is a nonprofit microfinancing company that provides business loans and other services for small business owners who might otherwise have trouble getting traditional business loans. Accion International operates in 32 different countries located in North and South America, Africa and Asia. It began in 1961 as a community development organization, building roads, schools and community centers with volunteer labor in Venezuela and Brazil.
They added the microlending service in 1973, offering credit to entrepreneurs of small businesses in Brazil. This new service was so successful that eventually Accion began to focus all of its effort on providing these small loans. The first Accion pilot program opened in Brooklyn, New York in 1991, taking on the name Accion U.S. Network. Accion has made around 50,000 loans in the United States, with a total loan amount of $450 million, and they have a 90% loan repayment rate.
Types of Loans Offered
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Accion is designed to help small businesses that might otherwise struggle to get financial help, and they offer numerous specialized loan types for a variety of industries. The list of loan types that they offer is truly impressive:
- Women-Owned Business Loans
- Startup Business Loans
- Loans for Child Care or Daycare Businesses
- Salon and Spa Loans
- Restaurant and Food Industry Loans
- Veteran-Owned Business Loans
- Business Loans for People with Disabilities
- Native American Business Loans
- Green Business Loans
- Food and Beverage Business Loans
- Minority-Owned Business Loans
Helps Those in Minority Communities
As this list makes clear, Accion is particularly interested in helping minority and disenfranchised communities through economic development. Although they don’t give loans to businesses with damaged credit, they do help if credit is not well-established. They do this by relying on other strengths or sources of financing in order to make the loan possible. There is a minimum credit score requirement, which for their standard loan types is 575, but this is lower than many traditional business loans.
Gives Loan Tips
Also, if a business doesn’t qualify for a loan, they provide expert advice to help that business improve their financial situation, so that they are more likely to qualify the next time around. The business can then reapply for a loan in three to six months. Consequently, it can be helpful for a business to go through the application process even if they don’t get the loan because they learn valuable information that can help them grow and prosper.
The Accion website provides dozens of testimonials from actual small business owners who have benefited from their loan services. This adds a personal touch to the loan process, and it also gives some specific information about how Accion loans have helped small businesses. Putting a name and face to the people who have used Accion loan services might be encouraging to some who otherwise see the process as cold and clinical.
Accion’s small business loan services are available in all 50 states, as well as 32 countries across four continents. The online application process is very simple. Applicants fill out a few boxes, select their state on a map, and then submit their information. In two days, they will get a response letting them know if they qualify. There is also an option to receive email updates about the status of the loan application.
Small Loans Only
The loan amounts offered by Accion are fairly low compared to many other types of traditional business loans. The standard loan ranges from $500 to $50,000, and some loan types are even lower. For example, they have a start-up business loan that ranges from $1000 to $10,000. Consequently, Accion is simply not going to meet larger needs.
Potentially High Interest Rates
Also, some of their loan types have fairly high interest rates. The start-up business loan has a lowest possible interest rate of 10.99%. Most interest rates begin at 8.99%, which is a little bit better. Still, for an organization that is focused on helping small businesses who might not have many options, this seems high.
Difficult to Qualify
To that end, their minimum credit score requirements could be lower. Most of Accion’s loan types require a minimum credit score of 575 or higher. Consequently, Accion is not an option for businesses that might have struggled in the past and damaged their credit. They also take into consideration all past due debt and any bankruptcies. In fact, their minimum requirements are fairly extensive, which is simply going to make their services inaccessible to many businesses that are struggling to survive in economically depressed areas.
For example, a business cannot be more than 30 days late on any bill, loan, credit card or any other type of payment, and total late payments must be less than $30,000. The business can’t have had any foreclosures in the past 24 months, any bankruptcies in the past 12 months, and no late mortgage or rent payments in the past 12 months. Also, the business can’t have any mortgage rate adjustments due during the duration of the loan. Start-up loans require an outside income source other than the business. There is a little more flexibility for loans that are under $2,500, though the exact nature of this flexibility is not clear.
For businesses that have been operating less than six months, there are some additional, more stringent requirements. Total past-due debt must be less than $500, they must present two recent paystubs, the business must be located in a home or in an incubator, and they must present a 12-month cash-flow projection.
While all of these minimum requirements are understandable, they are going to make Accion’s loan services inaccessible to many businesses in the areas where they are focused. Business owners operating in low income neighborhoods are likely to have struggles due to a lack of outside financial help. Unfortunately, Accion might be added to the list of services that they cannot get.
Poor BBB Rating
The Better Business Bureau gives Accion a disappointing C rating because of their relatively short time in business compared to other loan companies, as well as outstanding customer complaints. Though complaint volume is low, Accion has not resolved all complaints. Also, the company is not accredited with the BBB, and though no company is required to become accredited with the BBB, it does provide an extra level of accountability and transparency.