Community Affairs:
Article Archive > New York

Grameen America Reaches the Microenterprises and Unbanked in New York City
Grameen America has brought to New York City the group lending and savings model successfully developed and refined in Bangladesh during the last 30 years. Grameen Bank and its creator, Professor Muhammad Yunus, jointly received the 2006 Nobel Peace Prize based on the success of the microfinance model. The bank provides loans, savings programs, remittance services, and other training to its borrowers. The small loans help Grameen America's customers start and grow microenterprises. Typical customers are low-income individuals who are unbanked and lack access to mainstream credit sources.

In November 2007, Grameen America opened the first pilot office in the United States in Queens, New York. There are plans to open additional New York locations over the next few years. The types of businesses funded through the Queens location include cosmetology, pet grooming, day care, clothing, jewelry, and food sales.

In the Grameen group model, prospective borrowers form groups comprised of five individuals. To build financial resources, all borrowers are required to save money when they receive loans. The group meets periodically to help educate borrowers on financial issues. This borrower education, combined with the savings requirement, encourages loan repayment.

In 2008, Grameen America provided 380 borrowers with more than $1 million in loans. Loans range from $500 to $3,000 for a term of 6 to 12 months. The interest rate charged is 15 percent, which is less than some alternative financing options that these borrowers previously used because of their lack of credit history.

Initially, Grameen America was funded by grants, private contributions, and loans. Its goal is to become a self-sustaining entity.

For further information, visit Grameen America's Web site.
[Community Developments Investments, Spring 2009]

Small Loans, Big Returns
Ways to Work (WtW) is a nonprofit, community development financial institution that helps lower-income people. WtW is designed to help borrowers attain financial independence and advance economically by having money to purchase dependable used cars to get to work or school. Since 1996, WtW has originated nearly 12,000 loans for more than $31 million and the average auto loan amounts to an average $3,400. Results of a 2006 WtW evaluation indicate that borrowers reported an average increase of 41 percent in their take-home pay. In addition, 67 percent of WtW borrowers report that they have used conventional financial services subsequent to receiving their WtW loans.

Headquartered in Milwaukee, WtW makes its loans from 43 offices in 21 states: California, Delaware, Florida, Hawaii, Illinois, Indiana, Louisiana, Maryland, Michigan, Minnesota, Missouri, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Virginia, Washington, and Wisconsin.

WtW offices are located in social service agencies affiliated with the Alliance of Children and Families (ACF). ACF agencies screen and provide financial education to borrowers and service the loans. WtW local offices provide financial education to more than three persons for every individual who receives a loan. Investors in WtW include several national foundations, the Community Development Financial Institution Fund of the U.S. Treasury Department, local United Way offices, and financial institutions. Banks can be involved by investing in the national WtW loan fund, by referring to local WtW offices prospective borrowers who do not meet conventional credit criteria, by participating in local WtW loan committees, and by providing grants and in-kind donations to WtW.

For more information, contact President Jeff Faulkner at (414) 359-1448 ext. 2, e-mail him, or visit his Web site.
[Community Developments Investments, Spring 2009]

New Incentives for Banks to Open Branches in Underserved Communities
In order to encourage new bank branches in areas with a demonstrated need for banking services, the New York State Banking Department created the Banking Development Districts (BDD) program. The program was recently expanded to provide additional incentives for banks to branch in underserved communities. The Enriched Banking Development District is open to both national and state-chartered banks. Banks receive state and local incentives, including more than $100 million in public funds available for deposits in new BDD branches, real property tax breaks for the branch, and assistance in locating suitable commercial space. In order to receive the BDD designation, a bank, in partnership with a local government sponsor, must submit an application to the New York State Banking Department. The goal of the Enriched BDD Initiative is to expand the program in unbanked communities across the state. There are currently 11 areas of New York City designated as prospective new BDDs.

For further information, please contact Daniel Delehanty at the NYS Banking Department at (212) 709-3574 or daniel.delehanty@banking.state.ny.us.
[Published in News from the Districts, Community Developments, Spring 2006]

Investing in Sustainable Forestry
Rural banks in northern New England and upstate New York now have the opportunity to invest in a vital industry sustaining their communities: forestry. Under a new investment fund introduced by Coastal Enterprises, Inc., banks can receive tax credits for their participation in a program providing long term working capital for sustainable timber harvesting and forest management across the northern regions of Maine, New Hampshire, Vermont and New York. The project has received an allocation of New Markets Tax Credits, and investors purchasing these tax credits will be capitalizing a fund supporting forest-based businesses such as paper mills while helping to sustain jobs and maintain working forests and receiving a direct credit to federal taxes at the same time. Last year, Coastal Enterprises celebrated its 25th year of providing critical support to community development initiatives in Maine, and is now expanding its market to encompass all of the northern New England and upstate New York.

For further information about this and other funds in these rural geographies, contact Coastal Enterprises, Inc, at (207) 882-7552.
[Published in News from the Districts, Community Developments Investments, Summer 2004]

Lower Manhattan Gets Affordable Housing
HUD, the state and city of New York, and Lower Manhattan Development Corp., are working together on affordable housing in Lower Manhattan to revitalize the area effected by the September 11th terrorist attacks. The agencies will implement a $50 million affordable housing initiative in Lower Manhattan that will fund 300 residential units for working families. The program will provide subsidies for affordable housing tied to the New York Liberty Bond program, which is a joint city/state partnership that provides tax-exempt bonds for the construction and renovation of commercial and residential facilities. The bonds are an incentive for developers operating in the residential market in Lower Manhattan by making construction and/or permanent mortgage loans for residential rental projects located in the area. This affordable housing initiative compliments the plan by Mayor Michael Bloomberg, "New Housing Marketplace: Creating Housing for the Next Generation." The Mayor's plan dedicates $3 billion in funds over the next five years, creating or preserving 65,000 units of affordable housing in NYC.

Contact: Lower Manhattan Development Corp. (212) 962-2300.
[Published in News from the Districts, Community Developments, Winter 2003]

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