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• Q1: One challenge with US-based micro finance is that the overhead costs are too high. The key is to keep those costs low until scale is reached (several thousand borrowers) and income from interest can pay for full time employees. In the meantime, I plan to use student and volunteer labor. My concern is maintaining a high quality program while still keeping overhead costs and interest rates low. Any suggestions for how to find funds to pay employees from the start, or to ensure a high level of quality service with students?
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  by bhenders43 

  04.02.09 | 07:56 PM

  This is a great idea and closely related to my own which is to employ ex-offenders and then use micro loans to boost them into capitalism (owning the means of production). I didn't see a way to vote for this idea, but you can vote for mine at http://www.ideablob.com/ideas/4997-Work-them-back-into-the-communi
  
  Brook Henderson

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  by randyuma 

  01.31.09 | 04:29 PM

  Have you looked at prosper.com? There is an opportunity to look at microfinance both as a potential lender or borrower. The concept basically puts microfinance proposals to the world. Interest rates are by bid and money can be pooled to help limit individual exposure. Service is handled through paypal and I have not heard of any complaints.

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  by lorax 

  01.30.09 | 12:22 PM

  I think that the economy is your friend. You are correct that green jobs are the focus and since we are so accustomed to following trends, I don't think that you will have a challenge finding people interested in your mission. You should be able to take it one step further. Since these students are probably going to have a difficult time finding work, they may be willing to work for equity, especially since green is at the forefront. Good luck.

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  by randyuma 

  01.26.09 | 10:51 AM

  Micro finance is a touch area and the amount of documentation makes this almost certain to be unsustainable. Why not start a pilot program with your students in an incubator format. Student loans could be used for the business (as long as the participant continues with their studies) and frequently carry great terms and repayment options. A small fee to help determine eligibility and complete the paperwork should create modest cash flow. This could relieve you of the "banking responsibilities" and the need for capital while accomplishing your mission.

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  by ppuff 

  01.24.09 | 04:37 PM

  I'm from New York so I'm not familiar with Rhode Island's State-specific programs. But on a federal level, you can look into the SBA (Small Business Administration)'s microloan program, as well as the US Dept. of Treasury's CDFI (Community Development Financial Institution) Fund. If your group becomes a SBA microlender or a certified CDFI, there are resources available as both grants or loans to help you raise capital for your loan fund and build your loan loss reserve, though the CDFI Fund requires a minimum of 1:1 matching fund ratio as a threshold for your funding request. (The TA portion of the CDFI Fund grant provides funding that can be used for personnel (salary & fringe benefits), equipment (computers, office supplies), contractor cost, training expenses, etc.). As a business with a Green focus, the new Administraiton might work in your favor by rolling out some Green-friendly opportunities you can apply for. A lot of banks also have community/economic development divisions that can provide revolving loan funds to sustain your loan capital -- though given the tightening o…moref credit in the market, it might be more difficult to form partnerships with financial institutions nowadays.
  
  In terms of overhead costs, keep in mind that for your business to eventually become an independent financing business for Green entrepreneurs, you would need to have a staff of loan officers/servicers who can provide technical assistance, underwriting (if you choose to underwrite the loans in-house), financial and accounting management, etc. -- in another word, all aspects of a small bank except with the added component of a Green focus and a commitment to education and Technical Assistance. The jobs you'll need to fill are positions that require experienced workers beyond what most students or recent grads would have.
  
  To start off with, however, you can look into partnering with local law firms that have attorneys willing to do pro bono work on reviewing your loan documents and/or guidelines; you can see if, instead of hiring your "own" staff, you can bring in a few Fellows with previous work experience in the field to be part of your start-up staff team. If you decide to go the non-profit route, putting together a good Board of Directors is very important. Perhaps some Board members can be more hands-on at first and take on the additional role as loan committee members to approve/deny loan applications. You don't want to compromise quality because of lack of money, but there are tons of creative ways to incorporate assistance from others to ensure you do everything to attract high-idea *and* low-risk borrowers.
  
  Good luck! This is a great idea and one that got me excited just by reading about it!

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  by _reators 

  01.23.09 | 08:25 AM

  I have the domain cocreators.com which has a parallel vision. I am looking for web developers to help with the (rather ugly) interface I have now. I belive people wh are out of work could showcase their talents on such a website.

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  by lizannzoe 

  01.11.09 | 02:14 PM

  Great idea and I will be watching it because I've been mulling the same idea over too for a few years. This is work I would love to devote to. Microfinance in the US---absolutely, we need this. Needs to be low-interest for the borrower though.
  I would make it all based on technology and automation like prosper.com and kiva.org----rather than a traditional fundraising nonprofit. Check out their models---also consider that that the Obama campaign was only able to raise money and support (without the usual billionaires, lobbyists, and special interest money) by using the same Internet, small donor-based model. I would invest in programmers and web designers -- and I'm sure there are students that could take those tasks on as a for-credit project.

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  by swimstarr 

  12.31.08 | 07:11 PM

  You do have quite a fine line to walk when you are looking for good labor that is cheap or free. I'd say free labor is the route you want to take with students who volunteer or help you as an internship. With an internship they have accountability with a grade and the school checking up on them. You may need one person to be in charge of the interns so that one person is consistent from semester, at first this will probably have to be you since you can't pay people. That is unless you can get a commitment from a student who wants to be with the program for a couple of semesters to gain in depth experience for a future career in the non profit sector.
  Here is a site the highlights the ins and outs of hiring student interns:
  http://www.business.com/directory/advice/employees/hiring-and-retention/hiring-interns-for-your-business/
  

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  by livingfree 

  12.31.08 | 02:58 PM

  I am not sure what Brown's finance major reputation is, but I would hope that it is good if you plan to use students to help start up this company. What you could do is try to plan out a way to get these students internship positions with your company that would ultimately give them school credit. But to make it worth their while (the students) they are going to nee more than just school credit. They are going to need to know that they are going to actually learn and use their finance skills in this job so that they can put this on a resume. Because in the end, its all about landing a job.
  You might even be able to post these internship positions on a website like this one to get more interest:
  http://www.quintcareers.com/grad_internships.html

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• What advice do you have to help me grow my idea?
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  by bmillard1 

  01.28.09 | 09:21 AM

  I have worked with the First Step Fund in Kansas City and it is a great model for any micro loan program. While it is not "green - oriented" the business model would be the same. Their phone # is 816 235-6116. Executive Director is Vanessa Finley. I'm sure she would be willing to share information/lessons learned, etc.

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  by Kae1Crafts 

  01.23.09 | 05:26 PM

  I personally like the Kiva model and have made 3 different $25.00 loans. What attracted me to Kiva was being able to learn about who received the loan and being able to follow their progress. This would be very powerful if you are looking for smaller investors. Even in difficult times there are those of us who want to be a part of something larger but can only give on a small scale.
  
  kae1crafts.etsy.com

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  by isporl 

  01.05.09 | 09:58 PM

  try to make your friends have less conspicuous usernames =)
  prestontoldmeto
  prestonisadouche
  sofake63

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  by agrilinc 

  01.05.09 | 08:50 AM

  You have excellent timing. Micro-finance in the U.S. will become increasingly necessary as more people suffer economically. If I were you, I would definitely continue to market at the grassroots level but not discount foundations that will gladly support micro-lending. Internet campaigns are also excellent. Build a Second Life existence, go after small donations, etc. Good Luck!

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  by kgraf 

  01.02.09 | 12:38 PM

  Awhile back - many years, in fact, I wrote a grant to the Hitachi Foundation for money to guarantee microloans to youth entrepreneurs. You might be able to leverage more for your funds if you raise a pool to guaratee regular bank loans. Although those were different economic times... Good luck with what looks to be a great idea.

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  by MSimon 

  01.01.09 | 11:22 PM

  Many funders seeking to do what you are operate from a non-profit base, either in full or in part. As a non-profit development specialist w/expertise in high-level giving this is the route I would recommend. This will open up the funding options for you --for instance you could then raise an endowment fund of 1mill or so which in good economic times yields interest at ~10k/month. You then use this money to generate loans. All interest from these loans goes to "feed" the principle to leverage your entire model. Check out Hebrew Free Loan, Opportunity Fund, Working Solutions for examples.

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  by livingfree 

  12.31.08 | 03:04 PM

  I do think that this is a great idea, it kind of goes along the same idea of what Advanta has tried to do with giving entrepreneurs the funding and credit to start their dream business, except you are even more focused on helping green types of businesses. But like you said, you do need money to make money. And unfortunately this is not the greatest time for starting banks and other sort of loan organizations, because the banks and other financial institutions are trying to get credit to fund the loans that they are giving credit to.
  So I think one of your best bets is to seek out grant money.
  Here are some links that might help you out, especially for your green business:
  http://www.greengrants.org/
  http://www.epa.gov/greenkit/finance.htm

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