About Lend for America

Lend for Americawas founded in October 2009 to drive forward a national movement — college students across the country starting microfinance institutions to spur economic development in their campus communities.

Throughout urban America, the working poor struggle to make ends meet. Many have started small businesses as a way to take control over their financial lives, working as cooks, cleaners and handymen to provide extra income for their families. The problem is that many of these entrepreneurs lack the tools to build a successful business. No one has taught them the right way to manage cash flow, to price products or to create a business plan. Nor do they have access to the financing that could help them expand their businesses.

Meanwhile, thousands of college students hunger for a substantive way to make a difference in their communities. They want to be part of something that calls not only for manual labor, but for intelligence and analytic ability as well. They want to lead a movement in which profitability and social responsibility go hand-in hand.

Microfinance is that movement, and college students are uniquely positioned to deliver it to America’s low-income entrepreneurs. The recent financial crisis has created new challenges for U.S. microenterprise organizations struggling with issues of sustainability and scale. With grant and donor dollars curtailed in this environment, the search for innovative business models that lower the cost of service delivery and require lower levels of donor financing, is more imperative than ever before.

Lend for America supports the student-led MFI movement through a national platform that provides training, networking, funding, and research. In the last year, we reached over 500 students across 32 states through our programs, which include a year-long fellowship program, annual conference, and on-site, intensive technical assistance. We were featured on CNN, researched by the Aspen Institute, funded by Capital One, and we won an innovation award from Ashoka. There are now more than 15 groups that belong to Lend for America that extend nationwide, and we get calls every other week from students at other schools who want to join and start new organizations.

Watch the documentary below about the Community Empowerment Fund, a Lend for America member organization started in Chapel Hill, NC:





Using this Guide

Lend for America (LFA) compiled this resource for students to have an always available reference during the first three years of start-up. The material and resources in this kit have been written and created by student leaders and LFA staff. This guide is for emerging campus based organizations to determine whether their community can support a microfinance initiative and outlines best practices for getting started with offering microfinance products and services. Several additional resources on microenterprise development and student leadership are referenced in the last few sections. We encourage you to rely on these resources to avoid common mistakes.

Steps to Start Up

To start, follow steps we identified below. This will help to document ideas and resources that can be leveraged as you are building a new organization. Additionally, it is important as you begin fundraising and raising visibility around your products and services that you demonstrate real effort in assessing need and demand for this new organization. Download this PDF of steps to follow while starting up a Campus MFI.

Step 1: Is microfinance right for your community?

What you need: 2 to 5 people and $50 or less

The first thing to do before starting is to figure out if there is a need for what you would like to start in the community. This step is not difficult or expensive, but it is important to learn about your campus community and what services already exist for your potential target market.

Host a focus group, ask small business owners to fill out a questionnaire, and set up meetings with local nonprofits. Begin to narrow your target market and learn who your ‘ideal client’ is - see the Chapter on Marketing for an in-depth guide on completing this step. Completing this step will lay the groundwork for building credibility within the community you will be working with. It will also help you to craft a compelling vision to describe your organization’s niche to funders, advisors, and staff.

Do it yourself:

Sample questions for business owners (focus on small scale businesses such as food carts, landscaping, cleaning services, entrepreneurs who are venders at farmers markets, etc):
  1. How did you get started with your small business?
  2. What are some challenges you face with growing your business?
  3. What community groups are you involved with in the area?
  4. Have you ever applied for a loan for your small business? If yes, how was that experience? If not, why?
  5. Have you ever attended a business training course? If so, what was it like and was it useful?
  6. Are there topics or themes you’d like to learn about to further develop your small business?

Sample questions for nonprofit service providers:
  1. What resources are available to the community to address issues of ? (predatory lending, lack of access to capital, access to affordable housing, etc)
  2. What are some barriers community members face to accessing these resources?
  3. What is your most significant challenge as a service provider in this community?

Tips:
  1. Keep in mind the difference between asking questions in a curious, empathetic manner and treating community members like specimens in a science experiment. Leave your clipboard at home.
  2. The dialogue should feel natural. When you stumble upon interesting information, dig deeper, and continue with questions that pertain to that topic.
  3. Please refer to Marketing for Micro 101, an Aspen FIELD publication with additional background information on determining your target market. (http://campusmfi.org/files/Marketing-Handbook.pdf)
  4. State your reason for asking these questions: “I'm exploring starting a campus organization that will focus on XX so I'm here to learn from community members”.


Step 2: Determine Which products and services to offer


What you need: 2 to 5 people and $0

Based on your community outreach completed in step 1, what products and services should your campus MFI offer? Here are some ideas for types of financial services other campus MFIs offer:

a) Microloans under $5,000 for businesses
b) Kiva Zip Trustee: Offer technical assistance to help business owners access loans
c) Credit Builder loans
d) Citizenship Loans
e) Consumer savings products
f) Training classes for business owners and entrepreneurs
g) One on one financial coaching for business owners
h) One on one financial coaching for individuals

Frequently Asked Questions about Start-uP

  1. Where did you find your seed money?
  2. Was getting fundraising first or getting clients first a priority?
  3. What other challenges did you face?

Intersect Fund responses:
1) We got a $1,000 grant from the foundation of a small community bank headquartered in New Brunswick.

2) Getting clients was the first priority, as the folks we talked to about raising money weren't taking us seriously without them.

3) Main challenges were recruiting students willing to do the hard work involved, learning about the NB community, its needs, and channels to reach them, and gaining the confidence and learning the material necessary to deliver valuable business development services.


Elmseed Enterprise Fund responses:
We started with a $20,000 grant from the Yale Entrepreneurial Society. While I can't speak on behalf of the founders, based on the size of the grant I would assume that after receiving it they were then focused on developing the business model and getting clients. We've faced numerous challenges through the years. We've tried group-lending, membership-based, integrated consulting and loan, and are now completely distinguishing between consulting and loan clients. Other challenges include information management/transfer, staff turnover, and loan delinquency (to an extent - our repayment is still 86%).