Big Help - Miami-based Microlenders Enable Small Businesses

Rochelle Broder-Singer | 1/1/2011

In the developing world, microlenders — usually non-profits — have made a big difference to small businesses. OUR Microlending has turned the practice on its head, bringing microlending to the U.S. in the form of a for-profit company.

The Miami-based lender makes loans of between $1,000 and $20,000 to small businesses in south Florida. It charges the maximum interest rates the state allows —?from 16% to 18% annually?— but for entrepreneurs like John Hiraldo and Franci Bedoja the deal works because they usually can’t get bank loans at all.

OUR President and founder Emilio Santandreu says the company finds around 80% of its clients through referrals. The rest come through its sales team. “We go to the market, and we go to the street to look for them,” he says. [Photo: Daniel Portnoy]

The husband and wife, who own a Miami cell phone accessories distributor called Movil Wireless, have taken out two loans from OUR. The loans, for $10,000 and then $9,000, allowed them to increase their inventory and ultimately take on three large customers with high-volume business. “We’ve seen sales double, practically, since we received those three new clients,” Hiraldo says.

Other OUR clients include mechanic shops, restaurants, consultants and flea market stores, generally with a business at least a couple of years old.

OUR provides qualified businesses — based not on credit history, but on business plan and experience — with money and financial education. Its default rate is 14%. Those who pay off an initial loan can get a second loan with better terms.

Although OUR, founded in 2007, is the only for-profit microfinance company in Florida, the sector could be ripe for more players. The Aspen Institute estimates that only 2% of potential U.S. microfinance customers are being served. That’s one reason why OUR plans to expand to Tampa and Orlando early this year and hopes to cover the entire state in 2012.

To do that, OUR will need more money to lend. Its 14 shareholders, most of whom worked in microfinance in Venezuela before starting the company, have so far funded all lending with their own money. OUR President and founder Emilio Santandreu says the company is filing with the Securities and Exchange Commission in hopes of raising more funds through debt or equity. He’d like to find socially responsible investors who “want to invest in microlending and at the same time make a very good profit.”

Tags: Miami-Dade, Banking & Finance