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LFA Conference - International House

The 2014 Lend for America Summit

About Lend for America (LFA)

LFA is a program of the Intersect Fund, a CDFI based in New Jersey. LFA helps college students start and run Campus MFIs. Campus MFIs are teams of students who go into their local college communities to find individuals and microbusinesses that need assistance. Students spend time understanding their local communities, motivating their clients, offering basic financial advice, and lending small amounts of money they have raised. Further information about Lend for America can be found at www.lendforamerica.com

 

Annual Lend for America Summit

The annual Lend for America Summit is a discussion-based summit that gathers leaders from campus MFIs, focusing on the development and achievement of each campus MFIs. The Summit includes hands-on training workshops that use real-life examples, advices on getting jobs and internships in the social sector, networking with social sector professionals and student leaders, and etc. We were very fortunate to have 5 students attend this years summit, with their reactions to the event available to be viewed in the following blog posts:

Kayoung Lee (’16) Executive Director
LFA Conference Takeaways

Jennifer Kowalski (’17) Media and Communications Director
Using Data to Measure Effectiveness

Daisy Yuan (’17)
Reading Critical Underwriting Documents 

Siyan Wang (’17)
Client Communication 

Sitao Guo (’16)
Advice on Getting Jobs and Internships in the Social Sector

 

LFA Conference - Sitao

LFA Conference: Advice on Getting Jobs and Internships in the Social Sector

There are several workshops in the summit talking about getting jobs and

internships, especially for the entry-level positions. Several business leaders in the social

sectors introduced their experiences and advices for newcomers.

One workshop is called “Your Dream Job: The Social Sector Search”. A Yale

Alumna introduced her suggestions of job searches and interview tips. Firstly, There are

several factors that we need to consider when looking for a job, like locations, job roles,

specialists or generalists, company cultures and so on. It is also good for us to have a five

to ten years vision of career path therefore we can move forward step by step. Second,

she listed some resources that college students can use when they look for jobs, such us

the college career center, alumni, job treks, speakers on campus, online resources and so

on. Besides, we can also get a better sense of a company’s culture by doing volunteer job

or internship there. Third, she gave us some important interview tips to remember. We

need to confirm an interview the day before to make sure nothing goes wrong with the

time. The questions we ask during the interview should be as personable as possible

instead of general questions that can be easily found on websites. Another thing to

remember is that do not ask for job or introduction during the interview. This can be done

in the following emails with thank-you notes. There is one template that she introduced,

“It would be really appreciated if you could forward me any opportunity you heard of

that you think might be a good fit.” The most important is that to make sure we are

humble, confident, passionate, open-minded and gracious during the interview to present

the best of ourselves.

Another workshop is “We Want You: Entry-level Jobs and Internships in the

Social Sectors”. Six representatives from different business in the social sector, like Kiva

and Accion, shared their experiences with us. The most significant factor that all of them

talked about is to find our passion. It is almost impossible to work passionately if you

don’t love your work. Therefore they suggested us to try various new jobs in different

sectors and discover what we deeply love. When we really find our passion, it is the half

way to success.

 

-Sitao Guo ’16

LFA Conference TriCo

LFA Conference: Using Data to Measure Effectiveness

Five club members were fortunate enough to attend the 2014 Lend for America Summit that was held this past weekend at UC Berkley. This was my first time attending this annual microfinance conference, and I was pleasantly surprised to find that they had sessions for campus MFIs at all different stages. For HMFC, the Proving Impact: Using Data to Measure Effectiveness session could not have been more appropriate as it focused on the importance of collecting data at every step of the way. Below I will share the key aspects of this topic, especially those that are applicable to an MFI beginning the loaning/consulting process.

 

We are about to take in our first clients and this puts us at a vital time in the data collection process. It was stressed that gathering information from clients is needed before we offer any services so that a baseline (one that allows us to measure changes in the future) can be established.  A logic model presented consisted of data collection at the 5 major stages of our business process:

1. Inputs – Need to track resources invested before services are provided to our clients

2. Process – Need to document the planned activities that utilize the above inputs in

conjunction with delivery

3. Outputs – Need to evaluate the amount of products/services delivered upon delivery

4. Outcomes – Need to evaluate ways in which clients benefit 1 – 2 years post delivery

5. Impact – Need to evaluate changes in communities 2+ years post delivery

It was recommended that initial data collection consist of a (true/false) Financial Literacy Test, an Entrepreneurial Spirit Index (measured on a scale of 1 – 10) and a (yes/no) Financial Index. The repetition of this collection varies widely from company to company. Some ask for responses every month, others only ask for it immediately after the client has had an interaction with the MFI, and still some only collect entry and exit information. HMFC should come to consensus about our preferred method rather immediately so that our process will remain consistent with substantial data for all clients.

 

In addition to what is listed above, it was noted that one of the most important aspects of data collection post-delivery consists of measuring client satisfaction. The most important aspect of this is client referral, which can be measured by a Net Promoter Score. It should be asked how likely the client is (from a scale of 1 to 10 so that changes are able to be closely tracked over time) to recommend HMFC to his/her colleagues or friends. Responses can be categorized as follows:

9 – 10 : Promoter

7 – 8 : Passive

< 6 : Detractor

Based on this information, it is now possible to target incentives at the promoters (as client referral is one the crucial ways for our clientele to grow), as well as to gather vital information from the detractors that could help in our company’s improvement.

 

Overall, I believe that HMFC should implement a data collection methodology in order to accurately track our impact. Although qualitative responses are also helpful, quantitative data is necessary to concretely show what impact we have had. I look forward to taking what I learned at this conference and implementing it back at Haverford!

See fieldus.org/Publications/DataThatWorks.pdf for more information on this topic.

 

-Jennifer Kowalski ’17

LFA Conference Sign

LFA Conference Take-Aways

This was my second time attending the annual Lend for America conference, so while the sessions were informative and helpful, discussions with leaders in between the sessions provided insightful advice more specific to where our club is at the moment. The opportunity to network and share information in person with leaders who have faced and overcome similar challenges in operating their campus MFI, on top of the informative workshops, was what made the long travel for a short conference worthwhile. I have condensed a couple of the conversations that I had outside of the workshops into two quick take-aways.

Take-away #1: Establish steps in the vetting process that will move us out of gray areas into black or white areas. Establishing clear criteria that would provide a decisive “yes” or “no” even at the first meeting with a potential borrower will become useful and more necessary as we hear from more interested borrowers – we will probably have a better sense of what these decisive factors are as we interact with more business-owners. Ultimately, the interested borrowers’ time is also valuable, so we should identify and eliminate any “artificial hurdles” if there are other indicators that this loan will not work out. One or two documents and meetings would be ideal. The most important factors for evaluating clients initially seems to be their credit score and how they have been repaying others over the past 12 months, as well as the loan payment-to-income ratio (see Credit Karma).

Take-away #2: Some tips to keep in mind as a Kiva Zip trustee. The borrowers most successful on Kiva Zip are typically the ones who sell products because they present something tangible to potential lenders online. Several indicators of a good potential borrower include e-mail responsiveness, a cooperative attitude, and operation of a Facebook page or list-serve that they use to reach out to a network of contacts. It is also important for the loan to be time sensitive – there should be a good reason that they need it right now. Good photos are crucial, so we want a great photographer working with our clients. Having someone in charge of managing a partnership with a small government organization can be useful because they come across small businesses very frequently. It is very important to establish a good vetting process early on, so we should not be in a rush to endorse the first couple clients. A Kiva Zip trustee that I spoke with at the conference said that it typically takes them up to three months to endorse a borrower.

All in all, while this has been a crazy weekend for the five of us (which required more modes of transportation and hours of traveling than should be necessary within a span of three days), I think we come back enriched through the informative sessions and interactions with leaders in other campuses.

-Kayoung Lee ’16

LFA Conference Logo

LFA Conference: Reading Critical Underwriting Documents

When underwriting a small loan, we will need to evaluate a client’s current financial status. Besides application and dialogues with the client, three official documents, credit report, pay stubs and bank statement are usually taken into consideration as an objective and quantitative measurement of the business income.

Credit Report:

Credit report gives MFIs a general idea of the client’s past borrowing behaviours. A credit report consists of 4 components, personal information; tradelines which is categorized into revolving, mortgage and installment accounts; public records in terms of civil judgment, bankruptcy, tax lien, collections and inquiries; and FICO score. It is important to make sure all 4 components are provided to be able to assess the client’s credit history in a more comprehensive manner. The most commonly used websites to pull credit reports from are Credit Karma, Credit Builders Alliance and Annual Credit Report. Potential online resources such as sample dispute letters and Bankitis can be utilized to help clients remove errors.

Things to keep in mind when reading a credit report:

- The credit report gives you the numbers; the client gives you the context. Use the credit report as a framework for questions for the potential client.

- Make sure you can find each account in the Credit Summary within the credit report.

Pay Stubs:

Pay stubs are one of the most critical documents to calculate net monthly income using two methods: YTD Average and Pay Period Gross-Up.

YTD Average:

Is considered to be the most accurate method. It is how much a client has taken home on average over the course of the year.

Monthly Net Income=YTD Net Income/(#of months elapsed through pay period)

=(YTD Gross-YTD Deductions)/(#of months elapsed through pay period)

Pay Period Gross-Up:

Calculates how much would be earned if the same paycheck was earned every pay period. There are 4 kinds of pay period: weekly and bi-weekly, which usually end on a Saturday and are for hourly employees; monthly and bi-monthly, which usually end on last day of month and are for salaried employees.

Monthly Net Income=(Pay Period Net Income/# of days in pay period)*30

                =((PP Gross-PP Deductions)/# of days in day period)*30

Pay period is not explicitly stated on pay stubs. It can be induced either by applying the general pattern listed above or using www.paycheckcity.com.

Bank Statement:

Is used for business sales or global HH cash flow, usually not for expenses. When looking at a bank statement, we should focus on beginning balance, ending balance and average balance. Average balance is the most important; however, most major banks only show average balances for business accounts while most of our potential clients own personal accounts only. It can be calculated using the formula below:

Ave. Balance=(Daily ending balance * # of days+…)/# of days in the period

Another figure that serves as an important measure of affordability is ADB Coverage Ratio.

ADB Coverage Ratio= Average Daily Balance/Monthly Loan Payment

- Diasy Yuan ’17

LFA Conference - Siyan

LFA Conference: Client Communication

Client communication is a big issue in loan application. In the meeting, speakers mentioned several points that we need to pay attention to particularly during our talk with the client.

The first one is that we need to build the trust with our client. This is the first step and a very important step to start a long-lasting and effective relationship with our client. Hence, we need to show our passion, patience, honesty and care at the very beginning of the contact with our client. Certainly, to keep trust also requires us to keep contact with the client. It is not a good choice just to contact the client once. The better choice is to keep contact with the client and talk with him or her like a professional friend.

The second one is to pay attention to details. That requires us to know our client as detailed as we can. For example, in the case they gave us to practice, we know how much the client goes to church, how many kids she has, her consuming habits, etc. In other words, we know almost everything related to her life. Then, we can provide as much useful information as we can. However, we need to keep in mind that all details are received based on the trust with the client.

In order to keep this trust, we need to keep in mind out relationship with the client. In other words, we need to know what we should say in different steps. If you two just know each other, it is impolite and inappropriate to ask some too secret questions. Hence, every time we talk with our client, we need to ask us, how deep our relationship is? Then, you can pick up appropriate questions to ask.

Another thing we need to keep in mind is that we can talk about one question multi-dimensionally. That means we can use both logical analysis and emotional persuasion at the same time. When you find that you cannot persuade your client in this way, except for listening to what he or she says carefully, you should try to communicate with him or her in another way to express your idea thoroughly.

The last point is to keep flexible. Change the way you talk according to the process of the talk with your client. It is ineffective and inefficient to read the outline you have written already. We should learn how to modify our talk with the client appropriately and immediately to increase the efficiency of our talk.

- Siyan Wang ’17