Micro-lender Accion moving forward along several fronts

Staff, San Antonio Business Journal | Dec 20, 2009, 11:00pm CST

Micro-lender ACCION Texas-Louisiana is poised for growth in the coming year.

Just this week, the San Antonio-based ACCION Texas-Louisiana opened its second office in Louisiana.

The opening of the new office, located in the city of Alexandria, is part of the company’s earlier announced plans to expand into the neighboring state.

Operating costs for the office are being funded by $475,000 in grants from the city of Alexandria as well as the city’s Red River Bank and Rapides Foundation. The city and the bank also provided an additional $400,000 to the ACCION office to capitalize a loan pool.

ACCION plans to open a Shreveport, La., office during the first quarter of 2010. Funding for that office, says ACCION President and CEO Janie Barrera, will come from the Shreveport-based Beaird Family Foundation and the city of Shreveport. Additional information on the exact funding amounts has yet to be released.

“The plan is to have four locations in Louisiana (New Orleans was the first) to cover the entire state. The fourth office in the works will be located in Baton Rouge. And that will complete the footprint,” Barrera says.

ACCION plans to continue to grow through organic expansion and by providing back-office service support for other microlending organizations across the country, Barrera adds.

Another arrangement that has opened new doors for ACCION is its partnership with New York-based lender Citi.

In August 2008, Citi entered into a five-year contract with ACCION to purchase up to $30 million in micro-enterprise loans. As part of the agreement, ACCION serves as Citi’s national service provider, handling collections, servicing and underwriting.

One year later, the partnership has generated $6 million in loans to help finance small businesses in underserved communities.

Robert “Bob” Annibale, Citi’s global director of microfinance, says Citi’s partnership with ACCION has proven to be a good deal for both parties.

The reason?

ACCION is close to its clients and knows the lending landscape in which it operates. Furthermore, Annibale says, having ACCION handle the servicing and underwriting of the loans cuts costs for financial institutions.

“It’s an important demonstration of what we can do together or what banks can do in partnership with community development institutions like ACCION,” Annibale says. “I think the model itself will be … replicated in different forms. For us, this is an important partnership in terms of learning and understanding who are the types of partners we can work with.”

Janie Barrera, ACCION president and CEO, says the $6 million the organization is managing for Citi, represents about 30 percent of its loans under management.

Next year, she says, her company plans to lend $17.5 million, of which $7.5 million will be sold to Citi.

“By selling these loans to Citi, we are sharing in the risk and the revenue,” Barrera says.

ACCION Texas-Lousiana is a locally based, private nonprofit microlender. It has the largest active microloan portfolio in the U.S.

It began operating in San Antonio in 1994 and has 14 offices in 12 cities in Texas and Louisiana. Since its inception, ACCION has served over 10,000 clients with loans totaling more than $89 million.

Future growth

Barrera says ACCION’s previously announced plan to merge with the South Texas Business Fund (STBF) and the Community Development Loan Fund (CDLF) remains in motion.

“It will be very convenient to have a one-stop loan and technical assistance center for the business people of San Antonio,” Barrera says.

The STBF is the lending arm of the City of San Antonio’s Economic Development Department that administrates key U.S. Small Business Administration financing products. It is also a certified development company and a nonprofit.

The CDLF is a nonprofit that provides financing to small businesses, nonprofits and underserved areas of the city.

A.J. Rodriguez, executive director of the STBF, says the group’s board passed a motion in mid-November to pursue a merger of all three lenders as the most viable option.

The next step, Rodriguez says, is to have a follow-up meeting in January to get additional questions answered regarding the proposed merger.

The outcome of this meeting, he says, will determine if all three parties will approve a potential Memorandum of Understanding in February or March.

Following this, the proposed merger will still need the approval of the City Council’s Economic and Community Development Committee, the City Council itself and the SBA.

If all goes as planned, Barrera says the plan is to house all loan officers at the CDLF campus at 225 W. Poplar on the city’s North Central Side.

The combined lending back-office operations will be housed at ACCION’s offices at 2014 S. Hackberry St. on the city’s South Side.

And, says Rodriguez, the STBF will vacate its offices on the 19th floor of the Frost building downtown, at 100 W. Houston St., Suite 1900.

“The purpose for doing this is because the city has looked at its economic development functions and decided … what it needs to focus on that we need to do better…,” Rodriguez says.

Though the STBF has been around for 30 years, Rodriguez says ACCION has demonstrated its ability to excel during its 15-year existence.

Rodriguez asks, “Why have the South Texas Business Fund potentially competing with someone that has had that kind of success here locally?”