It would be a far cry from her days at CBS and MTV, but Maureen Isern wanted to continue her TV production career – on her own.
She started a multimedia firm, Moped Productions, in 2007 out of her Park Slope, Brooklyn, apartment using savings and her credit cards.
Her startup survived the economic downturn and, last year, she wanted to borrow money to expand.
Isern, 31, approached several banks and the U.S. Small Business Administration, but was discouraged from applying.
“I was told I was too small and the level I was at was not secure enough for a loan,” said Isern, adding that her credit score was a respectable 700. “I never got to the point of applying because I realized if I got rejected it would hurt my credit.”
Amid her frustration, Isern turned to Accion USA, the city’s oldest and largest microlender. The organization agreed to a $7,000 loan, which helped Isern expand her marketing budget.
She’s since gained several new clients, hired a part-time office coordinator and hopes to open a separate office soon.
“The banks make you feel rather small,” Isern said. “Accion didn’t judge the size of my business. They weren’t interested in how big my business was – they were interested in how big I wanted my business to be.”
The financial crisis has heightened Accion’s significance in New York’s small business community, offering a source of financing for people like Isern who find it difficult to get loans from traditional sources.
As the recession took hold, Accion USA was flooded with applications –loan requests soared 60%--from entrepreneurs with credit scores that topped 700. People in this group typically would have qualified for loans before the financial crisis, experts said.
“Banks have limited appetite for risk nowadays, and mainline banks prefer not to underwrite small dollar loans because they are time consuming and the returns are limited,” said Gina Harman, CEO of Accion USA.
“It might take them as much time to underwrite a $50,000 loans as a $1 million one. Their emphasis is on the number of transactions compared to our emphasis, which is on the relationship,” she said.
“Even for people more networked and advantaged, it’s difficult to get bank financing,” said Lisa Servon, dean of Milano/The New School for Management and Urban Policy.
“The primary sources of startup financing for small businesses are home equity and family and friends,” she said. However, “New York business owners don’t have access to home equity that the nation does {because} there are far fewer homeowners.”
Servon noted that Accion “has been very good at targeting and reaching immigrant markets in the U.S.”
That includes entrepreneurs like Monica Gonzalez, 41, of Maspeth, Queens. She emigrated from Venezuela in 2000 with two children. Speaking little English, she learned the baking trade working for others and kept her credit in good standing.
The loans totaling $25,000 helped her several years ago open Tanto Dulce, a bakery-café in Hamilton Heights on Broadway.
“They really helped me,” Gonzalez said. “I didn’t have enough money to open.”
With business strong due to a loyal clientele, she opened another café last month in Elmhurst, Queens, on Grand Ave.
Juan Torrez of Forest Hills, Queens, knew it would be tough to get a loan to expand his three-year-old graphic design and printing business. He didn’t realize how tough.
“They gave me the run-around,” said Torrez, 34, who runs Pluus Creative in Long Island City, Queens. “I never got a clear and defined response. I think one of the factors was because I didn’t have collateral or own property.”
His credit score at the time of nearly 800 – close to the highest rating – didn’t help seal a deal. In fact, previous credit inquiries slightly lowered his score.
“I felt frustrated because I had paid off student loans, had zero credit card debt and had a 17-year credit history with no bad marks,” he said.
About Accion USA
Since its inception in 1991 in Williamsburg, Brooklyn, the organization has disbursed $84.4 million in loans to more than 11,550 local small business owners, ranging from home-based businesses to well-known restaurateurs. Most are concentrated in Brooklyn and Queens.
Loans range from $500 to $50,000; the local average is about $8,000.
Besides loaning money, the organization provides financial education, such as workshops on business planning and marketing, establishing credit and repairing damaged credit.
For more information, visit accionusa.org or call (866) 245-0783.
Last year, Accion loaned Torrez $20,000, allowing him to submit bids on larger projects. He also won business from Accion.
While filling a void, the group hasn’t been immune to the problems many banks have to confront: borrowers who have had trouble making payments.
“We are working with earlier intervention,” Harman said. “In situations with demonstrated hardship, we will work with borrowers to make it easier for them to meet their payment obligations.