| Texas/New Mexico Rural Access to Credit (TX/NM)
Location and Context
The growth and vitality of small business is crucial to the economies
of Texas and New Mexico. According to the US Small Business Administration,
microenterprises employing 1 to 4 persons created 41% of the 910,000 net
new jobs created in Texas from 1992 to 1996¹. In 1997, nearly 60% of over
375,000 Texas businesses had four or fewer workers and the state had nearly
1 million self-employed persons generating $46.7 billion in business income.
In New Mexico, businesses with fewer than 4 employees created 60,000 jobs
from 1992-1996, 75% of all new jobs created in the state for the period.
Small businesses comprise 96% of all employers in New Mexico. Fifty-seven
percent (57%) of businesses had fewer than four employees.
The ACCION Texas rural-service area encompasses 30 border counties and
44 rural South Texas counties spanning over 100,000 sq. miles. These 74
counties comprise 30% of the 254 counties in Texas and have a combined
population of nearly 5.5 million. The 13 border counties serviced directly
by ACCION Texas staff have the highest concentrations of colonias in the
state, with over 1400 colonias officially recognized by the Office of
the Texas Attorney General. Since 1994, ACCION Texas has made 3278 loans
valued at $13 million to over 2000 microbusiness owners.
Nearly 65% of New Mexico's population of 1.8 million resides in rural
communities. The state reports 102 colonias and 22 Native American pueblos.
Over the past 15 years, New Mexico has fallen behind the U.S. average
per capita income by 25.4%². With limited employment options, New Mexican
families are in desperate need of viable economic solutions. By offering
tools of economic self-reliance - business credit and training - ACCION
preempts spiraling poverty and disturbing economic projections in rural
areas. The multiplier-effect of small business growth in poor communities
significantly improves quality-of-life for business owners, their families,
and employees through greater and more reliable incomes. Since 1994, ACCION
New Mexico has assisted over 900 small businesses with over 1646 loans
and lent over $4 million with a repayment rate of 98%.
¹ Most recent SBA published data available that breaks down information
by size of firm.
² U.S. Department of Commerce, Bureau of Economic Analysis.
Collaborative Structure and Strategy
The Texas/New Mexico Rural Access-to-Credit Partnership confronts rural
poverty through a multi-tiered approach that will bring new and sustainable
resources to rural small business owners, who will in turn --- through business
growth and prosperity --- create measurable improvements in quality of life
for their families, their employees, their business suppliers, and their
communities. To support small business growth and success in rural areas,
the Access-to-Credit Partnership will:
- Leverage capital and other resources to expand small and microbusiness
lending and technical assistance in rural areas of Texas and New Mexico;
- Impact regional and state policy on allocation of small business
lending and technical assistance resources to rural communities;
- Create and strengthen formal and informal partnerships among philanthropic,
corporate and public access-to-credit organizations in Texas and New
Mexico;
- Develop local capacity and leadership among small and micro business
owners as a sustainable anti-poverty strategy; and
- Document the successes and lessons-learned by the Partnership to
identify the most effective approaches for rural lending.
Studies of the microbusiness economy emphasize access to business capital
as the key to the stabilization of small businesses and growth in job creation.
As a result of capital restraints, as many as 80% of microbusinesses operate
below potential. A study conducted by ACCION International in 1996 found
that after three loans, microenterprises owned and operated by low-income
entrepreneurs, on average, increased business revenues by 61%, increased
business assets by 71%, and increased take-home business income by 87%.
After only three loans, borrowers created additional employment opportunities.
Clients also reported many non-financial benefits such as increased pride,
self-realization, and greater community participation because of investment
in their businesses. Through tools of economic self-reliance - business
credit and training - the Partnership will help rural businesses combat
spiraling poverty and disturbing economic projections in their rural communities.
Leverage and Impact
ACCION Texas and ACCION New Mexico will share successful rural lending and
colonia outreach methodologies and strategies that utilize small business
development centers, rural banking partners and other community partners
to close loans and help micro-borrowers complete loan applications. ACCION
Texas and ACCION New Mexico will jointly develop print collaterals (brochures,
stationary, client directories etc.) and displays promoting rural microlending
activity for rural branch banks and other rural partner locations. ACCION
New Mexico will expand lending into additional rural communities through
new relationships with tribal governments and small business technical assistance
providers. ACCION Texas will expand lending into additional rural communities
through new relationships with Area Councils of Governments and rural banks.
ACCION Texas and ACCION New Mexico will also coordinate and jointly submit
applications to national and regional funders and banks to support rural
lending expansion.
To increase lending to rural microenterprises the Partnership will leverage
over $3.2 million in loans, grants, and in-kind contributions from regional
and rural banks and funders to expand the nonprofit lending activities of
ACCION Texas and ACCION New Mexico in remote rural communities. New sources
of capital will generate over 600 rural loans in Texas and 345 loans in
rural New Mexico with a combined value $2.8 million. Loans in rural areas
will make up 28-30% of ACCION New Mexico loans and 20% of ACCION Texas loans.
Over 1500 rural jobs will be created or sustained because of these loans.
Capital raised for expanded rural lending will remain part of a revolving
loan fund targeting rural entrepreneurs.
|
Main
Contact
|
|
 |
Janie Barrera
Texas/ New Mexico Rural Access to Credit Partnership: ACCION Texas/
ACCION New Mexico jbarrera@acciontexas.org
|
|
|
|