Citi Community Development and the Philadelphia-based nonprofits Finanta and Entrepreneur Works today announced that they will collaborate on the pioneering “Circles of Success” program to provide a combination of lending, credit building, and financial literacy for underserved and low-income entrepreneurs. The program was launched and highlighted during an event at Finanta headquarters at which Philadelphia Mayor Michael A. Nutter announced a $2.3 million commitment to a group of community organizations providing small business assistance.
The unique set of challenges faced by underserved and under-banked entrepreneurs—many of whom are immigrants and/or low-income earners living in distressed communities—is experienced in an especially acute way in Philadelphia, which has a rapidly growing immigrant community. According to the 2010 Census, almost 22 percent of Philadelphia’s 1.54 million residents are language or ethnic minorities, up from 9 percent in 2000. Foreign-born individuals often experience greater difficulties opening bank accounts, establishing credit histories, and building good credit scores.
The innovative Circles of Success program was created to help Philadelphia jumpstart entrepreneurship, which has been shown to be an especially effective way for low-wealth or under-employed individuals to generate income, build assets, and achieve financial security. Building on the histories and inherent strengths of both organizations-which have a combined 37 years of experience working in the credit building and microfinance space—Finanta will work with Spanish-speaking micro and small business owners who have limited English language proficiency and Entrepreneur Works will focus its efforts primarily on the Afro-Caribbean business community. The program is expected to serve more than 100 underserved small business owners in the Philadelphia area.
“By connecting the microloan process with credit building, this program contributes to the long-term viability of entrepreneurs, their businesses and the jobs they provide,” said Mayor Nutter. “My administration always seeks to work together with the private, nonprofit and public sectors in innovative ways to ensure a stable foundation for Philadelphia’s businesses.”
Finanta and Entrepreneur Works will make loans of between $1,000 and $20,000 to program participants; successful repayment will be reported through the formal credit reporting system in order to directly build the participants’ credit scores. Thus, the program not only will support the development of Philadelphia-area microbusinesses in the short term but also will enable underserved entrepreneurs to build credit so they can access more sources of financing and lower the cost of the capital and services needed to grow their businesses. The two organizations also will provide coaching and financial education to program participants. Circles of Success will be funded by a $125,000 Citi Community Development grant to support both the initial pilot and the development of a national framework for replication.
“This program is an innovative and effective way to enable underserved entrepreneurs to overcome the barriers to forming good credit and accessing mainstream markets and sources of capital,” said Donald L. Haskin, Pennsylvania State Director for Citi Community Development. “Particularly during periods of high poverty and unemployment, it’s imperative for us to empower more entrepreneurs — many of whom are immigrants, low-income earners and living in distressed communities — to provide financial stability for themselves and their families and to create jobs.”
“Increasingly, a strong credit score is an asset that is often required for employment and access to a greater range of lower-cost services and products,” said Luis Mora, executive director of Finanta. “Through this program, we will work with microentrepreneurs to build this asset as well as their businesses, so that they can increase their economic opportunities.”
“This microlending program will make innovative use of the Rotating Savings and Credit Association (ROSCA) model, a peer-based banking arrangement in which small groups of individual entrepreneurs work together to contribute to a common loan fund and decide lending limits among themselves,” said Entrepreneur Works CEO Leslie Benoliel. “Here, we are pioneering an innovative and replicable implementation of a model that is commonly used informally in rural areas of underdeveloped countries.”
About Finanta
Finanta promotes the growth and economic expansion of diverse Philadelphia communities through the infusion of capital and provision of business consultation services and homeownership counseling. We are committed to supporting entrepreneurs and first-time homeowners with financial education and lending services that match the ever-changing needs of their families and businesses. Our individualized technical assistance and financing solutions provide our clients — often under- or unbanked individuals — with the means to build credit and develop economic self-sufficiency over time. With 15 years experience as a Community Development Financial Institution (CDFI), we have successfully lent $30 million to nearly 250 customers in the City of Philadelphia, helping to create and retain over 1,100 jobs. We are a certified intermediary lender for the Small Business Administration’s (SBA) Microloan Program, and have lending programs sponsored by the PA Treasury Department. FINANTA is also an approved participating lender for the Pennsylvania Housing Finance Agency’s (PHFA) home purchase program, which has helped us expand our lending programs and make a greater impact in our communities. For more information, visit www.finanta.org.
About Entrepreneur Works
Entrepreneur Works is a nonprofit 501(c)(3) corporation that provides supportive services to entrepreneurs and small business owners to assist them in starting or incorporating an existing business better. Our mission is to cultivate and promote successful microenterprises in distressed communities throughout Delaware Valley, thus creating economic prosperity and employment. In pursuit of this mission, Entrepreneur Works assists entrepreneurs with customized business support services, loans and networking opportunities—tools that are often difficult to access for those who are low-income, minority and otherwise underserved. With office locations in Philadelphia and Chester, PA, Entrepreneur Works provides a comprehensive array of financial and business development services including: small business and peer loans, business skills workshops and classes, business consulting, and networking. For more information, visit www.myentrepreneurworks.org.
About Citi Community Development
Citi Community Development (CCD) is leading Citi’s commitment to achieve economic empowerment and growth for underserved individuals, families and communities by expanding access to financial products and services, and building sustainable business solutions and innovative partnerships. Our focus areas include: commercial and philanthropic funding; innovative financial products and services; and collaborations with institutions that expand access to financial products and services for low-income and underserved communities. For more information, please visit www.citicommunitydevelopment.com.
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Contacts:
David Roskin, 212-559-4767
david.roskin@citi.com
