Which policy instruments are the most effective at financing business start-ups by under-represented groups? By Faisel Rahman, Founder & Managing Director, Fair Finance
Presentation from the capacity building seminar “Financing business start-up by under-represented groups”, 27-29 June 2012, Trento – Italy; organised by the Local Economic and Employment Development (LEED) Programme and its Trento Centre at the OECD in collaboration with the Directorate-General Employment, Social Affairs and Inclusion of the European Commission. See www.trento.oecd.org
Similar a Which policy instruments are the most effective at financing business start-ups by under-represented groups? By Faisel Rahman, Founder & Managing Director, Fair Finance
Similar a Which policy instruments are the most effective at financing business start-ups by under-represented groups? By Faisel Rahman, Founder & Managing Director, Fair Finance (20)
Which policy instruments are the most effective at financing business start-ups by under-represented groups? By Faisel Rahman, Founder & Managing Director, Fair Finance
5. Policy Action Team 3
• Commercial Experience
• Motivation
• Confidence
• Cultural Barriers
6. Policy Action Team 3
• Commercial Experience
• Motivation
• Confidence
• Cultural Barriers
• High Quality Business Advice
7. Policy Action Team 3
• Commercial Experience
• Motivation
• Confidence
• Cultural Barriers
• High Quality Business Advice
• Appropriate Finance
8. Identity 1. Passport
2. Driving License
3. Utility Bill
9. Identity 1. Passport
2. Driving License
3. Utility Bill
Analyses
4. Employment
5. Assets/savings
6. Credit history
10. Start up micro business
- one bank account
- cash based transactions
- few invoices
- no accounts
- no cashflow projections
- no or limited trading history
- bad or no personal credit
- bad credit history
- legality questions
1.
11. Lender Average APR
Morses Ltd 365%
Provident 469%
Rhodes Finance 1064%
CLC 1564%
Pay Day 2500%+
12. Priorities in choosing financial
products
1. Price
2. Security
3. Brand/marketing
4. New technology
5. Ethics
13. Priorities in choosing financial
products
1. Accessibility
2. Flexibility
3. Honesty and simplicity
4. Respect
5. Relationship
16. EMN Members
88 Members in 23
countries
Full members, Corporate
members and Partners
NGOs, Banks, Think tanks,
Research institutes, Funds
72% Practitioners
12% Corporate members
24% Eastern Europe
24% research, consulting
companies
European Microfinance Network
17. Challenges
1. Variable quality
2. Regulatory challenges
3. Expectation challenges
4. Funding problem
5. Limitation of scope
18. Successful microfinance
organisations…
Are small or medium social businesses
Have non standard legal structures
Innovating financial services
Conduct a business that the mainstream
consider too risky
Independent
19. Successful microfinance
organisations…
Are small or medium social businesses
Have non standard legal structures
Innovating financial services
Conduct a business that the mainstream
consider too risky
Independent
- A regulators nightmare!
20. Bring social and commercial investors together
Grants focused solely on areas
where needed most
Donors
Social
investors
Increase impact by leveraging Banks
commercial finance
Lend on commercial terms
Benefit from security and ‘first
loss’ cover provided by
social investors