On Wednesday Net Impact Austin co-sponsored a talk on Microfinance in the USA during the RISE conference. Those of you who attended the last Net Impact event on Microfinance In Texas (Raising the BoP) may recall that many attendees were interested in how similar concepts work in the USA. Kala Philo founder of the Austin Microfinance Network led an engaging panel consisting of professionals who cover a wide variety of roles dealing with Microfinance right here in Central Texas.

Some interesting points that I took away from the panelists:

Of those who could potentially benefit from micro credit loans to start or scale a small business, only 2% have engaged a micro credit lender. The panelists noted that a lot of the population that could use microcredit are generally afraid of lenders because they fear the rejection they have experienced at the large traditional banks. This creates a educational challenge for lenders like Big Austin, Accion, and People Fund as well as an added expense in an all ready high touch industry.

Business owners in underserved markets generally don't keep records which adds a hurtle to the qualification process. Another challenge is that collateral is hard to come by, and character plays a much larger role. Susie Sosa discussed her work with Mango and MPower Labs in generating a new psychometric qualification process to qualify individuals who show entrepreneurial acumen. These advances and innovations in mobile technology should help micro lenders reach a wider customer base in the near future.

Finally, despite the challenges and lower than expected microcredit adoption rate, these programs really work. Allowing access to credit to budding business owners in under developed regions lifts families out of subsistence and promotes job creation in the regions that need them the most. Between the lenders represented, there are currently tens of millions of dollars in loans helping families and communities create wealth and security in Central Texas alone.

Here is a list of the panelists:

Gary Linder,
Chief Operations Officer
Accion, Texas

Suzi Sosa
Chief of Staff
MPower Labs

Don Baylor
Sr. Policy Analyst, Economic Opportunity
Center for Public Policy Priorities

Claudia Conner,
Women Business Center Director
Big Austin

Margo Weisz, Executive Director
PeopleFund

Moderated by Kala Philo
Community Engagement Lead
Austin Microfinance Network