WE-Lend Initiative Overview

Transcription

1 WE-Lend Initiative Overview Women s Business Centers (WBC s) play a critical role in the growth, sustainability, and success of women entrepreneurs. On April 4, 2014 the Sam s Club Giving Program and Sam s Club announced a $2.5 million grant to launch WE-Lend, a nationwide initiative designed to help WBC s increase access to working capital and loans for a greater number of low to moderate income women entrepreneurs. This includes: Increasing the number of WBC s providing high quality microlending services, Expanding the number of WBC s providing strong referral relationships with existing microlenders, Strengthening the service delivery and operations of WBC s in order to increase support to women entrepreneurs across the country. The WE-Lend initiative will function as a collaboration between Sam s Club and three leaders in small business development and microlending: Accion, National Community Reinvestment Coalition (NCRC) and Women Impacting Public Policy (WIPP). This two-year initiative will include two program components: 1. The WE-Lend Institute, a training program utilizing a proven process and curriculum to transform select WBCs into organizations with capacity to directly enter the microlending business. Two years of training and $100,000 in temporarily restricted lending capital will be provided at no cost to participating WBCs. WBC s will be selected for the program based on an RFQ to be distributed in April of Additionally, an intensive train-the-trainer program will be created to provide business consulting and readiness training to WBCs not initially selected as Members of the WE- Lend Institute. This support will be provided to WBCs who are interested in strengthening their current operations and service delivery but are in need of additional technical capacity. WBC s will be hand-picked for these opportunities based on RFQ submissions and other factors. 2. The WE-Lend Packaging Program, an effort to strengthen the relationships between WBC s and existing microlenders and the capacity to help clients in the loan packaging process in markets where microlending infrastructure is currently strong. WBC s will be hand-picked for these opportunities and will be directly contacted. Through the WE-Lend Initiative, Sam s Club and its partners aim to increase access to affordable business loans for women entrepreneurs, empowering them to grow their businesses and jumpstart job creation in their communities. 1

2 Request for Qualifications (RFQ) For Membership in The WE-Lend Institute Issued: Month April 4, 2014 Application Period Ends: May 16, 2014 WE-Lend Institute Program Description Sam s Club with its grantees is currently seeking applications from not-for-profit WBC institutions interested in becoming Members in the WE-Lend Institute ( the Institute ). Up to five WBC s will initially be invited to participate in the Institute for a minimum two-year term (6 months of intensive training followed by 18 months of lending and mentoring), beginning on or about July Upon successful completion of Institute training, Members will receive a temporarily restricted grant for loan capital of $100,000 from Sam s Club and will be expected to demonstrate the capacity to raise the additional/matching funds necessary to launch and sustain a lending program. This matching model provides an ideal stepped approach to entering the microlending business. Institute Members will continue to receive mentoring and direct support for eighteen months (estimated to conclude January, 2016), at which time they will graduate from the Institute. Graduates will be expected to pursue their best efforts to continue microlending for at least five years, including sustainably greater loan volumes, following graduation. WE-Lend Institute Objectives Select up to 5 WBC s to undertake intensive microlending training for a period of approximately 6 months, followed by 12 months of side-by-side mentoring as lending begins, and a final 6 months of consulting and oversight to ensure Members reach independent operating sustainability. Provide Institute Members access to up to $100,000 of temporarily restricted grant funds from Sam s Club for loan capital to seed their microlending initiative, with a target of having Institute Members initiate lending within 180 days of the start of training, Develop a formal outcomes measurement tool. It is anticipated that the following outcomes will be realized in the Institute s first year of operations: Make at least 385 microloans to women-owned firms, Maintain or create 2,195 jobs, Facilitate more than $30 million in payroll, Facilitate more than $55 million in annual business revenue. Institute Curriculum Training for Institute Members will include intensive sessions on the following topics: Feasibility Assessment Mission and Financial Planning Marketing and Outreach Credit Analysis, Underwriting, and Structuring Credit Approval and Credit Policy Back Office Procedure and Loan Closing 2

3 Risk Management and Collection Governance, Audit and Compliance Resource Development/Fundraising for Microlending Financial Management and Reporting Systems Training on Microloan Management Services Institute Completion Requirements In order to successfully complete the Institute training program, Members must: Attend, actively participate, and share knowledge in-group and individual Institute training sessions. Be willing and able to travel for up to 4 weeks during the first twelve months of training. Create a long-term microlending business plan in collaboration with Institute trainers. Among other things, the plan will address ongoing funding/fundraising requirements, potential access to the SBA Microloan Program, and to other microloan funding. Pass a credit exam. Collect detailed monthly loan portfolio performance data, demographic data and general financial data upon commencement of lending activity. Data will be submitted quarterly to the Institute and Members may also be asked to provide interim information, as needed. General Financial Expectations for WE-Lend Institute Applicants All organizations invited to become Institute Members are required to allocate sufficient personnel and/or resources to ensure attendance at all Institute-sponsored training activities. The Institute roughly estimates the following will be required of Members. These estimates will change based on Member s actual characteristics and existing resources. All Members should expect to spend their own resources to make their participation successful. At best, over time applicants should expect 50% of total program expenses to be covered by earned portfolio income. Additional funding will need to be raised to maintain and/or grow the program. Existing unrestricted capital of up to $100,000 is desirable, but not required. The availability of unrestricted capital will better position an applicant to execute a successful launch into the microlending business and initially fund the capitalization of a new microlending legal entity. Increased grant funding will be required in subsequent years to grow loan production and mission outcomes. Access to additional loan capital, either in the form of granted funds or debt, will be necessary to achieve targeted loan volumes. Operating costs for the WBC trainee (most of which should be in-kind) will need to be covered by the WBC. Staffing in Year 1 should consist of at least 2 full time employees spending at least 50% of their time on Institute training. Staffing costs should be expected to increase in future years as additional staff members are hired to accommodate higher loan volumes. An average loan size of $8,000 is assumed. Loan portfolios are projected to earn approximately 13% interest and 3.5% fees, annually. Net loan losses as a percentage of the fiscal year end loan portfolio are projected to grow slowly over time, but should remain below 10% when operations stabilize. Depending on market size and opportunity, WBC s should expect to originate approximately 15 loans in Year 1 of lending, with a commitment to increase lending in subsequent years. Volume expectations can be tailored to each local WBC based on the market. 3

4 Eligibility Criteria Organizations applying to become WE-Lend Institute Members must be not-for-profit WBC institutions headquartered in the United States. The following criteria will be among those used to determine an applicant s fit as a Member of the Institute: The applicant should currently offer services complementary to microlending. Current activities and products should be directly related to assisting women-owned small businesses. Organizations should have a strong, demonstrated community presence, and access to support from other organizations with similar presences, to boost marketing, networking, and loan application flow. The applicant should possess (and/or have access to) a level of infrastructure upon which to build a robust microlending operation. Infrastructure includes trainable and interested staff, along with managerial, analytical, operational, technical, and administrative/processing capacities and programs/services adaptable to, or complementary with, microlending. The applicant s Board of Directors, Executive Management, and staff must be committed to entering the microlending business, and seek to achieve a meaningfully large and sustainable level of lending. Applicants should be willing to permit at least one site visit for Institute trainers to meet with key staff and board members before final Member selection is made. The applicant must currently be in a sound and sustainable financial condition to absorb the risks of microlending, and be able to access incremental loan and grant capital as required. The Applicant should be willing to participate in press efforts that Sam s Club, Accion, NCRC and WIPP may undertake to raise awareness of the WE-Lend initiative. RFQ Submission Please respond to the following questions and provide documentation as requested: 1. Provide proof of licensure, accreditation or certification from a state or federal body allowing operation as a not-for-profit institution. 2. Briefly describe the mission of your organization and explain how the addition of microlending will complement your institution s existing service offering to women-owned businesses. Your answer should include details about any current/previous lending activities (including historical volumes, loan performance, etc.) and how you intend to leverage your existing physical infrastructure, staff, board, internal controls, customer base, etc. to provide microlending services to women-owned businesses. 3. Detail the size and scope of your market, including the number of businesses, an estimate of the unmet demand for microloans, local demographics, etc. 4. Local references (government, not-for-profit, donors, etc.) to speak to the quality of your current work and the future potential of your WBC. 5. Detail the strength of your relationships (donors, municipalities, volunteers, distribution networks, etc.) that will support marketing efforts and the required fundraising needed to sustain a microlending operation. 6. Briefly describe the existing staff capabilities and financial resources your organization is willing to commit. Include resumes of relevant staff. If staff will need to be hired, please explain your plan for hiring and how the program would be governed internally. 7. Provide a written plan describing a continuity strategy to staff Institute training should there be unexpected personnel changes. 8. Provide the last three audited financial reports, the last three Form 990s filed with the IRS, and the most current fiscal year budget vs. actual to date. 9. Please provide a signed resolution from your Board of Directors and Executive Committee stating: 4

5 a. The organization s best effort commitment to actively participate in the Institute s training offerings; b. If invited, the organization s acceptance of the invitation to be trained for 24 months to enter the microlending business and provide two employees for this training; c. Upon graduation of intensive training, the organization s commitment to make a best effort to continue microlending for at least five years under a business and financial plan to be developed in collaboration with the Institute; d. Prior to commencing lending activities, the organization s agreement to create a separate legal entity for the sole purpose of housing and governing all microlending activity. RFQ Submission Instructions Please mail or responses to: Accion Chicago 1436 W. Randolph St. Suite 300 Chicago Il, Attn: RFQ Submissions we-lend@accionchicago.org Application Questions In order to efficiently respond to questions about this application, a conference call is scheduled for April 23, 2014 at 2:00 PM 3:00 PM EST. All questions and answers from the call will be posted online at This website will remain active throughout the WE Lend initiative. No phone calls please. Call-In #: Pass code: Application Deadline Response to this RFQ is required by May 16, 2014 at 5PM EDT. Please submit 3 copies of the RFQ response and all supporting documentation. Proposals received either in-person, by mail, or by after the closing date will not be considered. Focus Area Overview APPENDIX Research shows that women have launched businesses at a higher rate than men for the last 20 years. Women own the majority of home-based microenterprises (5 or fewer employees) in the U.S., and the American Express 2013 State of Women-Owned Businesses Report i revealed that between 1997 and 2013, the number of women-owned firms grew at 1½ times the national average. While women own 30% of the nation s small businesses, these businesses account for only 11% of sales, 14% of employment and 4% of national small business revenue. Furthermore, only 4% of women-owned firms generate more than $500,000 in annual sales. According to a 2013 Small Business Administration (SBA) report, the major constraint limiting the growth, expansion, and wealth creation of small firms, especially women and minority-owned businesses, is inadequate access to capital. Small firms have little or no collateral. Even though many businesses have high growth potential, they often lack the operating history required for lenders to reliably predict the business future performance. 5

6 Research shows that overall bank lending to small businesses remains adversely affected by a slow economic recovery and tighter bank capital requirements. As a result of relatively high processing costs and relatively small revenue streams, business lending at the lower end of the spectrum is especially difficult for for-profit institutions, even if charged very high rates of interest. For-profit institutions cannot affordably provide the technical assistance and support necessary to make customized small loans (below $25,000), especially to low-to-moderate income entrepreneurs. About the WE-Lend Institute Governance: The WE-Lend Institute will operate as a distinct training entity focused on building future WBC microlenders across the United States. An Advisory Board comprised of representatives selected jointly by Accion, NCRC WIPP and Sam s Club will govern the Institute. Training and Program Administration: Accion will provide training and program administration for the WE-Lend Institute. Accion is the largest and most experienced microlending network in the United States and represents an estimated 50% of the microloan volume in the country. Since 1991 Accion has disbursed more than $350 million in microloans to over 46,000 clients. Applicant WBC s not selected for the first round of the Institute may be eligible for direct consulting and support from NCRC and WIPP to strengthen identified weaknesses and position the WBC for potential future Institute application rounds. Loan Fund: Sam s Club will provide a Loan Fund (LF), a $500,000 pool of temporarily restricted grant capital that will be initially granted to Accion, who will in turn make temporarily restricted sub-grants to the Members of the Institute to fund loans as they are approved. All funding provided to Institute Members through sub-grants must be used to make loans for small businesses. Sam s Club has entered into an agreement with Accion to oversee Institute training activities, review outcomes, and make the disbursement of LF capital. Funds will be issued in stages based upon lending progress and will become unrestricted once they have been disbursed to small business owners. Subcontracting: After the initial 6 months of training, Institute Members will be offered the opportunity and grant funds to use the Accion Texas Inc. developed Microloan Management Services (MMS) system (online loan application, CRM system, and underwriting support) to provide additional operational strength. 6

7 WE-Lend Institute Application Checklist Proof of licensure, accreditation or certification from a state or federal body allowing operation as a not-for-profit institution. Description of the mission of your organization explaining how the addition of microlending will complement your institution s existing service offering to women-owned businesses. Local references (government, not-for-profit, donors, etc.) to speak to the quality of your current work and the future potential of your WBC. Details regarding the strength of your relationships (donors, municipalities, volunteers, distribution networks, etc.) that will support marketing efforts and the required fundraising needed to sustain a microlending operation. Description of your existing staff capabilities and financial resources your organization is willing to commit including resumes of relevant staff. Written plan describing a continuity strategy to staff Institute training should there be unexpected personnel changes. Last three audited financial reports, the last three Form 990s filed with the IRS, and the most current fiscal year budget vs. actual to date. Signed resolution from your Board of Directors and Executive Committee stating: o The organization s best effort commitment to actively participate in the Institute s training offerings; o If invited, the organization s acceptance of the invitation to be trained for 24 months to enter the microlending business and provide two employees for this training; o Upon graduation of intensive training, the organization s commitment to make a best effort to continue microlending for at least five years under a business and financial plan to be developed in collaboration with the Institute; o Prior to commencing lending activities, the organization s agreement to create a separate legal entity for the sole purpose of housing and governing all microlending activity. 7