Waltham, Mass. – April 17, 2012 – ACCION Texas, Inc. (ATI), the largest non-profit micro-lender in the United States, and InnoCentive, the pioneer in open innovation, crowdsourcing, and prize competitions, today announced a Challenge seeking a new tool to more accurately evaluate micro-loan applicants who may lack traditional credit history. The solution to this Challenge, which carries an award of $40,000, will be integrated into ATI’s current software model, which is available to other non-profit lenders for a small fee
The mission of ATI is to provide business loans, ranging in size from $500 to $250,000, to individuals and small businesses that do not have access to loans from commercial sources. ATI’s current loan approval methodology begins with applying an automated tool that assesses the risk of default for every applicant, taking into account factors such as credit and loan repayment history. This process has produced a strong loan portfolio with low delinquencies; however, the percentage of applications that are approved is very small, often because applicants are starting a business for the first time and thus have no established repayment history.
Rather than relaxing its underwriting guidelines, ATI is seeking a standardized risk assessment tool that would allow the organization to take into account alternate factors that make an applicant a good risk and therefore eligible for an ATI loan. This would allow ATI to revisit previous applicants who were denied funding, as well as dramatically increase the number of small and start-up businesses it can help through new applications. Paired with existing credit, financial and business training services, the solution will allow ATI to foster even greater economic development at a grassroots level.
“ACCION is the only micro-lender taking this innovative step, which will help create hundreds more small businesses and jobs in communities that desperately need them,” said Janie Barrera, founding president and CEO of ACCION Texas. “In turning to InnoCentive and its Solvers, our goal is to help these unbanked business owners create assets, build their balance sheets and become part of the formal financial system.”
“The beauty of crowdsourcing Challenges to a global community of problem Solvers is that any organization, small or large, can do it and benefit from the solutions,” said InnoCentive CEO Dwayne Spradlin. “Providing non-traditional means of funding for small businesses helps accelerate innovation on a local level, which is good for the economy overall. We’re delighted that we can help ACCION find new ways to empower these forward-thinking entrepreneurs.”
ACCION Texas Inc. is a private, non-profit 501(c) microenterprise development organization based in San Antonio. ACCION began lending in San Antonio in 1994 and later developed and implemented an innovative “blueprint” for establishing microlending and small business programs in new areas. The ACCION Texas network includes offices throughout Texas and Louisiana, two offices in Arkansas and one apiece in the Missouri Delta area and in Birmingham, Ala. In 2007, ACCION Texas Inc. began providing underwriting and loan services to other microlending institutions nationwide. A 2009 study of ACCION Texas Inc.’s economic impact calculated that their commitment in lending capital between 1994 and 2009 created economic activity of approximately $173.8 million. These results represent an estimated 60 percent social return on investment – every dollar loaned creates an additional 60 cents annually in new economic activity.
InnoCentive is the open innovation and crowdsourcing pioneer that enables organizations to solve their key problems by connecting them to diverse sources of innovation including employees, customers, partners, and the world’s largest problem solving marketplace. InnoCentive’s proven Challenge Driven Innovation methodology, network of millions of problem Solvers, and cloud-based technology platform combine to fundamentally transform the economics of innovation and R&D through rapid solution delivery and the development of sustainable open innovation programs. Leading commercial, government, and nonprofit organizations such as Booz Allen Hamilton, Eli Lilly & Company, Life Technologies, NASA, Nature Publishing Group, Popular Science, Procter & Gamble, Roche, Rockefeller Foundation, and The Economist partner with InnoCentive to solve problems and innovate faster, more cost effectively, and with less risk than ever before. For more information, visit www.innocentive.com or call 1-855-CROWDNOW.
Marisa D. Borgasano