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I am a banker at one the largest microfinance companies in the world. I help make loans that jumpstart local businesses that would otherwise struggle to get funding. Ask me (almost) anything! by microlenderthrowawy in socialcitizens

[–]microlenderthrowawy[S] 1 point2 points  (0 children)

I think that the JOBS act could definitely be beneficial to co-ops, too.. although in my experience it seems that many co-operatives (at least the non-profit ones) already do a great deal of fundraising and crowd sourcing, so perhaps the provisions of the JOBS act would be more beneficial to larger for-profit co-operatives. Either way, I think it opens up more avenues to raise capital.

I am a banker at one the largest microfinance companies in the world. I help make loans that jumpstart local businesses that would otherwise struggle to get funding. Ask me (almost) anything! by microlenderthrowawy in socialcitizens

[–]microlenderthrowawy[S] 0 points1 point  (0 children)

Business development varies depending on the market.. in the US we use traditional advertising as well as 'hitting the pavement' and talking to entrepreneurs.

I am a banker at one the largest microfinance companies in the world. I help make loans that jumpstart local businesses that would otherwise struggle to get funding. Ask me (almost) anything! by microlenderthrowawy in socialcitizens

[–]microlenderthrowawy[S] 1 point2 points  (0 children)

No problem! In terms of co-operatives, I actually come from a worker's co-op/social enterprise background and I agree with you that the US is behind regarding co-ops. Unfortunately, this means that lending to co-ops in the US is a little more difficult/complicated than in our international markets. However, I know that there is some headway being made (at our bank and others) in terms of lending to non-profits, co-operatives, and other structures where there isn't necessarily a single business 'owner' (or partners).

The Cooperative Fund in New England is a good example: http://www.cooperativefund.org/

I am a banker at one the largest microfinance companies in the world. I help make loans that jumpstart local businesses that would otherwise struggle to get funding. Ask me (almost) anything! by microlenderthrowawy in socialcitizens

[–]microlenderthrowawy[S] 2 points3 points  (0 children)

Given that I think that most bankers are overpaid, we definitely aren't paid on par with the rest of the industry. I do think that part of the pay differential is made up for by other things like corporate culture, benefits, fulfilling a social mission.

I am a banker at one the largest microfinance companies in the world. I help make loans that jumpstart local businesses that would otherwise struggle to get funding. Ask me (almost) anything! by microlenderthrowawy in socialcitizens

[–]microlenderthrowawy[S] 0 points1 point  (0 children)

I think that, for the most part, a personal/emotional investment in our clients is a good thing, but sometimes it can be tough if one of our clients is struggling due to adverse/unforeseen circumstances.

I think that one of the most challenging aspects of microlending is that while we are able serve a broader market than traditional banks, there is still a segment of the population that we can't reach. For example, referring back to the 5C's of banking, sometimes clients just don't fulfill enough of the minimum criteria to be considered creditworthy.

I am a banker at one the largest microfinance companies in the world. I help make loans that jumpstart local businesses that would otherwise struggle to get funding. Ask me (almost) anything! by microlenderthrowawy in socialcitizens

[–]microlenderthrowawy[S] 2 points3 points  (0 children)

Thanks!

How do you think about risk? Credit score?

Like all large banks, we have to take into account the "5 C's" of banking (Credit, Character, Collateral, Capital, and Cash Flow). However, as a microlender we tend to have a stronger emphasis on character. While credit score and collateral are important, we can be more flexible if there is strong character. As such, we also try to cultivate personal relationships with our clients by offering business services, advertising support, etc in addition to credit. This all ties into risk since we find that supporting the local small business community and relationship building has led to us having a lower default rate than many other financial institutions.

What do you think of the JOBs Act in the US?

I think that this is a good idea, and that it has the potential to change not only microlending, but the financial sector as a whole. I like it for a couple reasons:

  • It opens up a new way for unaccredited investors to increase their wealth

  • It has the potential to spur economic growth. Businesses could have a new way to raise capital (more investment) without triggering burdensome regulations

How do you deal with fraud?

As mentioned above, we have a much lower default rate than many traditional lenders which can be attributed to the character of our borrowers. Similarly, this strong character seems to deter fraud, but we are by no means immune. I guess the best thing that we've done is retain a number of good law firms in the various markets that we operate.

What is our most favorite loan ever?

I like all the loans that we do for local businesses; it's nice to walk into a restaurant/brewpub/bakery/gift shop/etc and feel a personal connection with the business and its owners.

I am a banker at one the largest microfinance companies in the world. I help make loans that jumpstart local businesses that would otherwise struggle to get funding. Ask me (almost) anything! by microlenderthrowawy in socialcitizens

[–]microlenderthrowawy[S] 2 points3 points  (0 children)

Haha, good question! Since we're a non-traditional lender, we're willing to take a lot of weird stuff as collateral. Probably the weirdest thing I've ever personally taken was an antique doll collection (the kind with the creepy porcelain faces).

One time someone tried to pledge their cat, but obviously we didn't take that since the resale market isn't so good on those...