13 Biggest Microfinance Companies in the United States

In this article we are going to list the 13 biggest microfinance companies in the United States. Click to skip ahead and jump to the 5 biggest microfinance companies in the United States. Microfinance, by definition, is a banking service that is provided to unemployed or low-income individuals or groups who may otherwise not have access to any financial services. Top finance companies such as Berkshire Hathaway (NYSE: BRK.A), JPMorgan Chase & Co. (NYSE: JPM), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and Citigroup (NYSE: C) are famous for providing financial services to people in the US that fit a certain set of requirements. However, microfinance companies offer a service which allows such individuals to take on reasonable small business loans in a safe and ethically sound manner. Services that come under the umbrella of microfinance include loans, savings, insurance, and fund transfers. People that may seek microfinance services are the unemployed, the underprivileged, small entrepreneurs, and small enterprises. The latter two may not be able to seek shelter of traditional sources such as banks, and thus choose to go to microfinance companies for their help. The goal of those providing microfinance services is to help these groups of people to become self-sufficient.

Microfinance companies are mostly nonprofit organizations that provide loans to low-income clients, including micro-companies and the self-employed, who traditionally lack access to mainstream sources of finance from banking institutions. Recently, however there has been an increasing trend of increase of profit-seeking microfinance institutions that will seek a definite return for investors, though those are mainly found outside the US.

The loans provided by microfinance companies are usually in small amounts and are for typically short periods of time, often a year or less. The difference between the loans provided by companies and the ones given by banks are that they are not secured by collateral assets. This is why the services provided by these companies are most attractive to those from a lower socio-economic background. The mandate of microfinance companies is to encourage social and economic development. Consequently, they are more concerned with the environmental and social risks of their transactions, so they take special steps to manage them.

In the United States, microfinance is a relatively newer concept, taking its first strides in the 1970s, with an increased awareness of the need to create a system where financial services are provided to those who may not have any access to traditional mediums. The first few campaigns promoting the ideology behind microfinancing were by the ShoreBank Corporation and the Women’s Economic Forum that aimed to show that the poor are creditworthy. Throughout the next decade, CFED and Opportunity Finance Network are formed, promoting policies to expand the reach of microfinance. ACCION International, a microfinance company employing its services abroad, introduces its microlending model to the United States in the early 1990s. In 1994, Congress passes the CDFI Fund ACT which further helped promote community development through investment and assistance. In 2009, Kiva, an international microfinance company helping families primarily in Africa, launched its partnership with the United States. 2010 is regarded as the time when microfinance institutions as a field of public interest emerged, with Microfinance USA, a nation-wide conference being held to promote microfinance in the United States. being held that same year.

Throughout the past decade, microfinance has become a favorable option for struggling families and entrepreneurs low on capital to help finance their needs. These institutions have impacted tens of millions of lives with responsible financial services, aiming to pull as many people out of the cycle of poverty as they can. So let us take a look at the biggest microfinance companies in the United States, starting with number 13.

13. Justine PETERSEN

Loans disbursed: $7.5 Million

Based in St. Louis, Missouri, Justine PETERSEN is a nonprofit corporation aiming to further the legacy of the late Justine M. Petersen, a frontrunner in promoting financial development among low income individuals and families. As an organization, they provide avenues into mainstream finance, by empowering individuals and families with knowledge, tools, and products to better their financial conditions. They provide access to capital for individuals and businesses in the St. Louis area since 2000, recently extending their services to all of Missouri, Eastern Kansas, and parts of Illinois.

12. FINCA

Loans disbursed: $18 Million

Founded in 1984, FINCA is linked with the international nonprofit FINCA International. It is based in Washington DC. FINCA International is the founder and majority owner of 20 community based microfinance institutions and banks across the regions of Africa, Eurasia, Latin America, Middle East, and South Asia. They combine traditional branches of microfinance with agency banking, alternative credit scoring and analytics, mobile wallets, and point of service biometrics to better serve their clients in remote areas. They have to date served over 2 million clients and over 850,000 borrowers.

11. Accompany Capital

Loans disbursed: $34 Million

Previously known as Business Center for New Americans, Accompany Capital is a leading New York City based Micro and Community Advantage lender, providing loans and capital to clients. In addition to loans, the company provides its clients with ongoing access to business training, one-on-one counseling, and technical assistance. Accompany Capital has disbursed over $34 Million in loans and assisted over 10,999 immigrant and refugee entrepreneurs in New York City since its founding in 1997. They have also given workshops and one-on-one advice on marketing and business management to over 10,000 business.

10. Main Street Launch

Loans Disbursed: $63.6 Million

Serving and empowering small business owners in the Bay Area since 1979, Main Street Launch provides access to capital to create economic opportunity  in the community. The company provides affordable micro and small business loans to small  businesses to help them expand in size, increase their profits, and reach their business goals. Main Street Launch now serves San-Francisco and veteran-owned businesses in California. In the last ten years, they have closed over 740 loans and created 5,400 jobs in the Bay Area. 52 percent and 56 percent of their clients are women-owned and minority-owned businesses respectively, with 72 percent of their client being from the low to moderate income range.

9. DreamSpring

Loans disbursed: $210 Million

Established 26 years ago, DreamSpring is an award-winning nonprofit organization that aims to increase credit, provide loans, and bring together a community of support for budding entrepreneurs and small businesses owners. They were previously a division of Accion which served the states of Arizona, Colorado, New Mexico, and Texas. They have had a great impact on many struggling individuals, families, and businesses across the United States, providing more than 14,000 loans in 600 communities. Those businesses that the organization has funded have created or sustained approximately 20,000 jobs. In 2018, it was reported that 90 percent of loans issued by the organization had been to low and moderate income, minority/women owned entrepreneurs.

8. LiftFund

Loans Disbursed: $360 Million

Established in 1994, LiftFund is a nonprofit organization based in San Antonio Texas. LiftFund is a small business lender which helps to serve new and existing entrepreneurs by helping finance startups that are not yet bank ready. They provide affordable business loans and business consultations in thirteen states to deserving women, startups, and entrepreneurs. The company is headquartered in Texas. LiftFund has had an impressive impact on clients, with 75 percent success rate and 96 percent repayment success.

7. Opportunity Fund

Loans disbursed: $440 Million

A leading microfinance nonprofit in the United States, Opportunity Funds provides loans to low and moderate-income individuals and families, immigrants, women, and other deserving small business owners. Their microloan and micro savings programs help struggling families gain the financial stability they are looking for. By 2019, they had served 11,065 unique business and invested over $440 million.

6. Accion

Loans Disbursed: $500 Million

Founded in the 1960s by a UC Berkeley Law student, Accion has come a long way since its inception. Initially the services provided by the organization were to Latin America by a group of 30 Americans working in Venezuela. In 1991, Accion brought its money lending model to the United States to better the growing economic inequality in the country. Accion helps those who do not meet requirements for traditional bank loans due to reasons that may include damaged credit or small loan requests. They now have a reach across 41 states across the nation.

Please continue to see the 5 biggest microfinance companies in the United States.

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Disclosure: No position. 13 biggest microfinance companies in the United States is originally published at Insider Monkey.