Eleven Million Low-Income Business Owners Cannot Access Business Credit; Study Shows Banks Are Not Reaching Minority Low- and Moderate-Income Entrepreneurs.

Business Editors & Features Writers

SOMERVILLE, Mass.--(BUSINESS WIRE)--Oct. 30, 2000

According to a market study commissioned by ACCION USA, 10.8 million small or "micro" entrepreneurs cannot get a bank loan to grow their businesses. Despite community outreach efforts by banks and a strong economy, small business owners - especially minority and low-income - are still left out of the economic mainstream.

Key findings from The Microlending Market in the U.S. include:

--There are an estimated 13.1 million microentrepreneurs in the United States (defined as someone who is either self-employed or is a business owner with five or fewer employees).

--Of the total U.S. microentrepreneurs, 82% - or 10.8 million - have never received a bank loan for their business.

--91.6% of Hispanic microentrepreneurs have not received a bank loan.

--83.3% of African-American microentrepreneurs have not received a bank loan.

--Microentrepreneurs do not consider banks to be a viable source of credit. Whether they have applied and been rejected, or they simply do not think it is worth applying, microentrepreneurs feel that banks will reject them because of:

--A lack of credit history

--A bad credit history

--Race

--Age

--Their need for a small loan

--Lack of collateral

--Their need for a start-up loan

--Microentrepreneurs who have considered a bank loan, but have not applied sited lengthy approval processes, complicated paperwork and fear of rejection as major deterrents.

"Our study shows that there is still an enormous un-met demand for credit for small businesses in the United States. So we've formed referral partnerships with banks throughout the country," says Bill Burrus, president and CEO of ACCION USA. "The partnerships allow us to help more small business owners and it gives banks an alternative to rejecting applicants who don't meet their lending criteria. Now they can send those applicants to ACCION."

ACCION programs serve low- and moderate-income microentrepreneurs in 21 cities and towns in the United States. Since the first U.S. program in New York was launched in 1991, ACCION has loaned over $25 million to 4,000 entrepreneurs - day-care providers, restaurant owners, home-based seamstresses - who start and run their own small businesses as a way to support themselves and their families.

ACCION USA is an initiative of nonprofit ACCION International. A world pioneer in microlending, ACCION International made its first small loans in Recife, Brazil in 1973. Now operating in the United States and 14 countries in Latin America and the Caribbean, ACCION has made over $2.7 billion in loans averaging $590 to more than 1.8 million hard-working owners of small businesses. Ninety-eight percent of these loans have been repaid.

Editor's Note: The Executive Summary of The Microlending Market in the U.S. is available at http://www.accion.org/about/main.asp.