This is the fourth in a six-part series spotlighting CDFIs in the Wells Fargo Works for Small Business®: Diverse Community Capital program network, funded with a $175 million commitment to help diverse small businesses grow. Every Tuesday through June 11, we will publish a story and case study that highlight an innovative program or service of these CDFIs. Follow the series here.
Accion Serving Illinois and Indiana’s mission is to help neighborhood entrepreneurs grow. Serving small businesses across Illinois and Indiana, the CDFI provides capital, coaching, and connections to business owners, many of whom are women and people of color. As part of its mission to reach more entrepreneurs and connect them to resources, Accion works with local and mainstream banks through a unique bank Referral Partnership Program.
“Accion has always had really good relationships with our banking partners in the Chicago area, and banks play an important role in building our client base,” said Jackie Merlo, Accion’s Manager of Development, Financial Institutions. “Last year, 31 percent of our clients who received a loan were introduced to us through a bank referral.”
The Referral Partnership Program is synergistic. Banks who are unable to extend a small business loan to current or potential account customers refer the entrepreneurs to Accion Community Lenders. Accion works with these small business owners, providing personalized business coaching and loans ranging from $500-$100,000. While working with Accion, entrepreneurs build credit, grow their businesses, and potentially become eligible for mainstream bank financing. In the meantime, Accion refers these entrepreneurs back to the original referring bank for deposits and merchant services.
Value All Around
It’s is a win/win/win for all parties involved.
“Banks don’t have to outright deny a customer,” said Jackie. “The program enables them to say “not now” for a loan while also providing value to customers by referring them to us.”
And the benefit to clients and Accion? “For our clients, they are given another option to secure a loan with us,” explained Jackie. “And Accion is able to attract new clients on our slim marketing budget.”
Jackie added that Accion is “currently reaching only one percent of our potential market and banks are a tool to attract new clients in the door.”
Accion’s partners include national banks such as Bank of America, Fifth Third, and JPMorgan Chase, all which have a presence in the Chicagoland area. Local partnerships include banks such as Woodforest Bank, which doesn’t serve the City of Chicago, but helps Accion reach its target market in rural areas downstate. Many smaller, local banks are also referral partners.
These partnerships come about in a few ways. In some cases, Accion, which is an OFN member and part of the Wells Fargo Diverse Community Capital network, has strong relationships with CRA or community investment teams, who champion the program internally.
“These are the most successful relationships, because the CRA, or Community Investment team is behind us stressing the importance of the program,” said Jackie.
In other instances, Accion’s lending staff initiate contact with banks in target market areas, or a bank lender hears about the program and reaches out to the CDFI.
Accion’s staff track bank relationships closely. Using the CDFI’s lending platform, Microloan Management Services, they capture information about each bank referral, from name of the banker to subsequent interactions with the bank.
Partly Fun and Games
More than just business, the bank referral program is also fun and games!
To incentivize—and acknowledge—its bank partners, Accion has created a friendly referral partner competition. Each month, the CDFI issues a “Scoreboard” that highlights the top five referring institutions and top five referring individuals. It also sends gift cards and products from Accion clients to regular referral contacts. And once a year, at Accion’s annual fundraiser, the nonprofit recognizes the year’s top bank and top individual referrers during a special award ceremony.
“It's become pretty competitive,” Jackie laughed. “We have one banker who won the individual contest two years in a row, and he’s in a friendly competition with his colleagues to maintain his own standing, as well as the bank’s standing. People watch that list closely! And in the end, it's neighborhood entrepreneurs that are the real winners.”
Learn more about the history and impact of Accion’s Referral Partnership Program in OFN’s case study.
Next up in the series: California FarmLink Cultivates Create Capital for Underserved Famers
About Wells Fargo Works for Small Business®: Diverse Community Capital program
The Wells Fargo Works for Small Business®: Diverse Community Capital program (DCC) will deliver $175 million in capital to Community Development Financial Institutions (CDFIs) that serve diverse small businesses. Since program launch, DCC has awarded $94.8 million in grants and capital to CDFIs to grow their lending and services to diverse small businesses.