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Monday, Oct 2, 2023

San Diego Lender Assists Underserved Borrowers

Small Business: Firms Take ‘Accion’ to Perk Up Business

After getting rejected for a line of credit from a bank, Danny Rieger doubted he would ever get the kind of help he needed to grow his business.

That all changed recently when Rieger and his partner, Ric Derichsweiler, received a $5,000 loan from Accion San Diego for their 5-year-old business, New Visions Wireless.

“Cash flow is always a problem for any business but especially a small one,” Rieger said. “We were always juggling money around sometimes you’re short and sometimes you’re over.”

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With the loan, the partners plan to purchase inventory including cell phones, pagers and accessories for their company, located at 4040 30th St. in North Park.

Besides selling cell phones and other communication devices, New Visions Wireless also provides paging services. The partners started the business five years ago with about $1,000, operating out of Rieger’s mother’s garage.

While the company’s sales have grown, profits were erratic, and Rieger’s less-than-perfect credit history, and an inconsistent earnings history were things a traditional bank could not overlook.

Yet, those facts didn’t stop Accion from taking the chance on New Visions Wireless.

Villa Mills, Accion San Diego’s president, said the business is typical of the type approved by the program’s loan officers.

A majority are home-based businesses that don’t have a long track record and are barely making ends meet, Mills said.

“They are either unwilling to go to a bank, or they cannot get a loan from a bank,” she said. “For almost all of them, a bank won’t even look at their applications because they’re asking for small amounts, and banks rarely make loans for less than $25,000.”

At Accion San Diego, $25,000 is the maximum loan amount, but the program offers loans for as low as $300. First-time borrowers are charged 16 percent, and the average term is about two years, she said.

Last month, Accion launched a Mid City Business Loan Program, working with five local business improvement districts to obtain referrals and help in conducting the underwriting process for the micro-loans.

“We wanted to target the Mid City because it’s an area that has been identified as underserved as far as small business credit needs go,” said Sandra Wharton, an Accion staffer.

The program involves regular contacts with business improvement districts , the Adams Avenue BID; the North Park BID; the College BID; the El Cajon Boulevard BID; and the City Heights BID.

The business improvement districts, nonprofit organizations that market neighborhood-based businesses, will get the word out among its members about the program, and help in the approval/underwriting process, Wharton said.

Underwriting for an Accion loan is much more flexible than that done by traditional lenders, Mills said.

“We don’t require a business plan, but what we do require is a level of confidence an idea that’s been thought out, along with the entrepreneurial drive and a willingness to work with us, and to pay the loan back,” she said.

The minimum qualifications call for an enterprise to be operating for at least six months.

Since its inception in San Diego in 1994, Accion has made more than 637 micro loans totaling more than $2.1 million. The program is an affiliate of Accion International, a private nonprofit micro loan organization dedicated to reducing poverty in the Americas.

Accion San Diego obtains the funds for loans, primarily from banks, in the form of low interest loans and grants.

Among the businesses that have received loans are attorneys, restaurants, bookkeepers, child care providers, and Internet-related companies, Mills said.

Coincidentally, Rieger said he’s thinking of using some of the loan to expand New Visions Wireless into offering Internet service.

“I’m still looking into it, but at least now I have the chance to think about it,” he said.


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