Accion Chicago has loan growth without adding fixed costs
In 2007, Accion Chicago found itself on the cusp of significant loan growth. While the growth was good news, CEO Jonathan Brereton, who ran a small staff of nine at the time, was facing the need to hire a new underwriter. Loan processing was done manually and was time-consuming, and the dedicated staff worked long, hard hours.
Scalability, in-depth reporting needed
He wanted an underwriting structure that would scale with growth, but not increase fixed costs, along with an online process to streamline loan applications.
“We never saw ourselves as developers of a system, but we were ready to use one,” he said. “The LiftFund system could pull out data and create sophisticated reports.” In addition, the online application process, with potential borrowers assisting in the process, was clearly a time saver. Accion Chicago uses the underwriting system, but has total flexibility to make its loan decisions locally.
Results were positive and immediate
While Accion Chicago saw a 6% growth in loan volume in 2008 as they implemented the new system, their 2009 loan volume showed 42% growth over the previous year. That growth trend has continued, with 21% loan growth in 2010 and 47% growth in 2011. In 2011, Accion Chicago made over $2M in loans to 301 small businesses.
“We have additional quality underwriting with relatively little incremental cost,” Brereton said.
System is flexible and well-priced
“For the microlending industry, this is great, and it’s particularly well priced for small organizations, enabling them to grow while containing their operational costs,” he said.
Wisconsin Women’s Business Initiative Corporation improved portfolio quality while increasing lending volume.
“The MMS system allowed us to serve far more clients with clearer underwriting guidelines, consistent with our mission. Our applications increased by 200% the first year and 150% the second year. Our total production increased by over 20% each year.” -Barbara Eckblad, Director of Lending at Wisconsin Women’s Business Inititative Corporation.