Technology and Communications
Team
Log # 8
By Andrew Chan
Beth Dunphe, the director of development from Project Enterprise
spoke about the operations of how her organization provides micro
loans to clients. Project Enterprise serves four out of the five
boroughs in NYC: Bronx, Brooklyn, Manhattan and Queens. 80% of
their clients are non-white; 55% coming from NYC. 34% of their
clients live below the poverty line. Those that live below the
poverty line earn less than $21,000. The median family income was
55% of the NYC median income of $55,000. It was interesting to see
compare the differences in microfinance abroad and microfinance
domestically. I thought that Project Enterprise’s services make
their organization and operations efficient and successful. They
provide training/workshops that help their borrowers develop a
practical business plan. In addition they have one-on-one technical
assistance that aid in the loan application process and developing
a business strategy. Most interestingly was the legal assistance.
They have a pro bono partnership with Dorsey and Whitney. I think
that legal assistance is important because it helps the clients
understand their boundaries, limits, and rights.
I was impressed by the impact that this organization has made. They
have trained 2,997 clients. The average monthly profit increased by
42% after getting a loan from Project Enterprise. This demonstrates
another example of how microfinance makes a positive impact on
disadvantaged entrepreneurs.
Marketing and Fundraising Team
Log # 8
By Yvonne Lee
Project Enterprise is the third biggest lender in the US, and they
have always sworn by their motto of “Small Loans, Big Connections”.
They place a lot of emphasis on growing a business. Project
Enterprise serves 34% of individuals below poverty, who are those
with an annual income below 21,000 USD. Their clients have a
median family income of 55,000 USD, and 80% of them are non-white.
They came about because traditional commercial banks used to
red-line some communities and never approved their loan requests.
Hence, there was a need to cater to the minorities and people who
did not have good enough collateral or credit ratings.
Project Enterprise has disbursed more than $1.7 Million in loans to
more than 650 entrepreneurs. They have three programs:
- Peer (Businesses in the startup stage, anyone can apply)
- Fast Track (1year in business, and with a revenue of more than
$5000)
- Direct ( More than 3 years in business)
I thought that their peer program was the most interesting and
relevant to GLOBE. It operates on a group methodology with a center
structure. Basically, it is a group of groups. Individuals are
tested on Project Enterprise’s criteria and what their fellow group
members’ businesses are about. In order to make sure that everyone
is on the same page before extending a loan to them, individuals
need to get certified by the organization, and go through six week
intensive pre loan training. This teaches them how to establish a
business plan as well as predict project costs, sales and cash
flows. At center meetings, they have to present to the board and
other lenders what their business is about. Group members of the
person who is asking for the loan have to convince the committee
that he or she is credible and will be able to pay the loan off.
These center meetings are very transparent and loans get approved
there and then. If one person does not pay the loan off, group
members have to pay up.
I’m currently a Financing Intern at NYC Business Solutions Lower
Manhattan Center, so I was familiar with a lot of the terms and
concepts that Beth covered in the lecture. Project Enterprise is
one of the biggest lenders that NYC Business Solutions work with.
We offer a suite of services that help small businesses expand, and
offer help to minority communities through our Minorities and Women
Better Enterprise Certification Program. We help prescreen clients
that need loans and then refer them to the most suitable lender. We
then package their loan applications before sending them to the
respective lenders. Hence, listening to Beth’s lecture put things
in a different perspective and helped me better understand the
microfinance industry in the US.
Reflecting on last week’s email blast about the GLOBE Microfinance
event on April 20, we thought that the message was too wordy and
the long paragraphs did not really help either. We are going to
send a second one out that is in bullet form and with “bite-sized”
pieces of information so that at a glance, people will comprehend
what we are trying to do. We also faced an obstacle with the bake
sale. Student Life only allows student organizations to reserve
tables and chairs for bake sales in Marillac Hall and D’ Angelo
Center. Since GLOBE is an academic program, the office may not
approve of our request. Hence, we have reached out to one of the
marketing team members from last semester to find out what they did
to get approval for their bake sale. We also need to book a video
screen and projector for the event in Marillac Terrace, and work on
the tote bags that we are handing out to students and faculty. With
just about two weeks to the event, we are all extremely excited but
are aware that there are still a lot of things to do.
Finance and Risk Assessment Team
Log # 8
By Rahel Solomon
Recently, we had the pleasure of meeting Beth from Project
Enterprise. I didn’t know about much about Project Enterprise
before her visit but was delighted to learn of the success of
microfinance on the domestic level. When I tell friends, family and
others about Globe, sadly the first response is often about how
there are needy entrepreneurs in the US. I am now very happy to
learn about Project Enterprise. Project Enterprise serves 34
% of individuals below the New York City poverty line with 88 % of
borrowers being African American and 58 % of borrowers being
women.
Beth mentioned early in her speech that Project Enterprise
originally began with a very “Grameen” like business model but have
since strayed from that model. As she continued, the extent to
which Project Enterprise has strayed became more and more clear. It
makes perfect sense that the two companies are very different
considering they operate in completely different
environments.
With a 92 % success rate and more than $1.2 million disbursed in
the last 5 years clearly Project Enterprise is doing something
right. What I thought most interesting about Beth’s lecture was
that PE is almost completely funded by donors and the interest from
the loans are used for administrative expenses. I wonder about the
sustainability of such a program; I realize that Project Enterprise
has been in existence for quite some years now but I can’t
help but wonder if there isn’t a more efficient way to
fundraise.
I also loved the fact that Project Enterprise at almost all costs
attempts to work out a payment schedule with its borrowers.
Entrepreneur Week I found to be a great way to keep borrowers
informed, connected and entertained. It seems that Project
Enterprise, though inspired by the Grameen Bank model, clearly
understands its unique differences and how to keep its borrowers
satisfied and re paying in a timely manner.
Accounting and Program Audit
Team
Log # 8
By Gabriela Papadopulos
The Grameen model of group lending or the so called “joined
responsibility” is what has been a major factor for its success in
Bangladesh and consequently it has been replicated by different
types of microfinance organizations. Group lending offers a
number of advantages for both borrowers and lenders. It provides
access to microcredit for underprivileged individuals while
lenders’ responsibilities are shifted to the group. Some of these
responsibilities include screening through potential borrowers in
the group formation, peer mentoring and monitoring, and enforcement
of the loan repayment- all resulting in cutting the costs for
processing the loans. The joined responsibility condition is what
leads to “assortative matching” in the formation of the group as
safe borrowers stick to safe types and respectively risky borrowers
are left with no alternative but organize in a group with not quite
reliable types. This sorting mechanism mitigates the risks of
adverse selection caused by lack of information about the borrowers
since it turns out that risky clients pay more often under group
lending where shared responsibility is present. As a result safe
borrowers are charged at lower rates and they are no longer placed
under pressure to shoulder the defaults of their riskier peers and
subsidize them by paying higher costs for them. The reduction of
interest rates for safe borrowers illustrates higher efficiency
resulted from the operating model of group lending as individuals
who have been previously pushed away from the market are being
encouraged to reenter it at more reasonable price.
As I mentioned before, the Grameen model has been replicated by
MFIs all over the world therefore I found it interesting to hear
about its domestic applications by our guest speaker from Project
Enterprise. Having annual income of $21 K or under is considered
the poverty line in the U.S. and surprisingly for everyone 34% of
New Yorkers live below this level. The data is not just simply
statistics that could be disregarded and the operation of a local
microfinance organization was necessitated. Project Enterprise laid
its foundations on the group methodology with its center structure.
Two of the programs provided by PE are Peer lending and Fast Track
lending and they involve the provision of small loans and business
development services without any preliminary credit score or
background checks. The best part is that after a six-week intensive
pre-loan training the self-selected groups are given the full
responsibility to attend center meetings, approve each other’s
loans and monitor the disbursements.
Group lending is the source for numerous successful stories that
happen every day domestically and abroad. Peer support and
networking, exchange of ideas and solidarity are some of the key
benefits to borrowers of this type. Moreover, the Grameen model
encourages the community spirit while at the same time develops a
sense of pride and achievement in group members who realize that
they are in possession of the power to improve their standard of
living.