Accion is a global non-profit with a mission to create opportunities for everyone in the world. It’s also the largest nonprofit microfinance network in the United States.
It boasts some impressive statistics on its homepage, having “provided over $7.9 million in loans to entrepreneurs in Arizona” since 2008, “over 2,400 loans totaling more than $14 million in Florida” since 2003, and “over 10,500 loans totaling more than $88 million in New York and New Jersey” since 1991.
Accion is a reputable lender with a philanthropic vision. It’s dedicated to helping small businesses owned by minorities and lower-income individuals. As a micro-lender, it works to bridge the gap for smaller businesses that can’t afford larger loans and are too risky for banks to take on.
If this type of loan sounds like it would be a good fit for your business, read on.
Accion Small Business Loan Details
Accion offers a selection of loans – business loans, loans for food and beverage small businesses, daycare business loans, and start-up business loans. In this review, we’ll be focusing on its business loan, but wanted to make you aware of the other options in case they suit your business better.
You can borrow $500 to $50,000 with a business loan, with interest rates ranging from 8.99% to 15.99%, and terms from 6 to 60 months.
An example payment would be: if you borrow $7,000 on a 12-month term with a 10.99% interest rate, your monthly payment will be $618.64. However, you need to factor in a processing fee of $135, and your origination fee, which can range from 3.00% - 5.00%.
Accion doesn’t have APRs listed on the site, but your APR will be presented to you if you’re approved for a loan.
The Pros and Cons of a Accion Small Business Loan
Pro: As Accion is a non-profit, it’s dedicated to helping small business with more than just financing. It says it can “help you connect with peers, local organizations, banks and more to provide as many opportunities for growth as possible.” Accion is committed to providing tips and advice to businesses to help them experience more growth as well, and has a library of business resources on its website.
Con: Since Accion is a micro-lender, $50,000 might not be enough for your business. There are other lenders out there willing to loan up to $300,000.
Pro: Accion offers flexible repayment terms to make loans more affordable – 6 to 60 months is a large range not seen by many other lenders.
Con: Unfortunately, there are closing costs and a processing fee associated with loans that are closed. We dislike customers being hit twice with fees and not many small business lenders have both. Accion admits its loans can be more expensive than a bank loan, but most of the small businesses it lends to can’t secure financing from a bank.
What Businesses Are Eligible For a Loan With Accion?
Accion suggests applying only for the exact amount you need. Underwriters place a lot of emphasis on what you’re going to do with the funds, as they want to make sure your business is going to profit from the loan.
Accion says it will work with you to create a cash flow plan to make sure the payments are manageable for your business. Your business expenses and income will be taken into consideration to ensure you can make payments. Cash flow is very important to Accion.
If your business has less than six months of sales, there are extra eligibility requirements, which can be found here.
Accion works with a number of industries, including restaurants, salons, home services, childcare, and more.
You need a minimum credit score of 575 to apply for a loan with Accion, though underwriters look at more than just your score. If your credit is damaged or thin, they’ll take a look at the strengths of your business and financials to see if a loan can be worked out.
If you’ve declared bankruptcy in the last 12 months, or have had any late rent or mortgage payments in the last 12 months, you won’t qualify for a loan. You also can’t have experienced a foreclosure in the last 24 months.
Application Process and Documents Needed
Filling out an application takes about 15 minutes. From there, it takes two business days to hear back from Accion. If you qualify for a loan, you’ll then work with a loan officer to submit any additional documentation needed.
If you don’t qualify, Accion will explain why, and you can reapply for a loan in three to six months.
Accion provides this document checklist you should go through before proceeding with the application:
- Last 3 months of business and personal bank statements
- Business lease
- Last 1-2 years tax returns
- Driver’s License
- Documentation of loan purpose (quotes, estimates, etc.)
- Most recent home and business utility bills
- Verification of any non-business income you’ve earned
- Most recent mortgage note (if you own your workspace)
- Business certificate, any required licenses, and corporate resolution
- Balance sheet, Profit and Loss statements, and cash flow statements
As you can tell, the documentation needed is quite involved. If you need to, get in touch with your accountant or bookkeeper to see if they can provide you with some of these. It’s a good idea to have everything ready before applying to make the process go smoother.
The Fine Print
There’s no prepayment penalty with Accion, but there are closing costs of 3.00% - 5.00% to be aware of, as well as a flat $135 processing fee for any loans that are closed. This has the potential to make your loan very costly, but Accion is upfront with the fees you’ll incur when it provides you with your terms. Make sure the numbers work out in your favor.
A personal guarantee by the business owner is also required.
Which Businesses Benefit the Most from a Loan With Accion?
Accion aims to help small businesses that otherwise wouldn’t have access to financing. It also loans to businesses typically looking for a small amount of capital – its average loan size is between $7,000 and $10,000.
If you’ve experienced difficulty in getting other lenders to approve you for a loan, you should try working with Accion. Its minimum credit score is fairly low, and there aren’t strict revenue requirements to meet.
If your business is more established, or you can secure financing with a bank or another online lender, Accion might not be right for you.
Other Alternative Small Business Lenders
Accion is the largest micro-lender in the United States, so if you need a smaller loan, it may be your best solution. The following lenders offer loans in smaller amounts, though they may be just as expensive.
Kabbage offers loans from $2,000 to $250,000 on 6 to 12 month terms. As we know, fees can add up, so it’s important to make sure your business will be able to profit from this loan. Additionally, your business has to have been operating for at least one year or more, and has generated $4,200 in monthly revenue for the past three months.
CanCapital offers loans from $2,500 to $250,000 on 6 to 18 month loans. The APR you receive depends on your industry, cash flow, and revenue. You need a minimum of $4,500 in monthly revenue, and must have been operating for the past 4 months. The minimum credit score needed is 550. There is an origination fee associated with the loan, but it can be waived.
Don’t Be Afraid to Shop Around
If you’ve been having a hard time getting approved for a small business loan, you may be apprehensive about shopping around even more. As long as you apply within a 30-day window, your credit score won’t see an enormous decrease. Credit bureaus know you’re trying to secure the best rates and terms for your business and won’t penalize you for it.
There are many online lenders out there with applications that typically take 15 minutes to complete. Set aside a few hours one day to go through a couple of lenders to see which ones you’ll qualify for a loan with, and apply. You have nothing to lose and you’ll be able to save money on the cost of your loan.