Students put their micro-lending skills to the real-world test by helping struggling area businesses
It’s not often that student groups come to the aid of business interests. Usually, it’s the other way around. But sometimes turnabout is fair play, especially when everyone benefits.
That’s the situation with a student organization that lends funds to struggling businesses in the Claremont-Pomona area. The In-Lend Fund, started in October 2012, is a microfinance institution (MFI) that provides micro- and low-income entrepreneurs with financial resources, ranging from direct capital support to educational support, in order to foster further economic development in the Pomona-Claremont area.
“It's actually quite a remarkable organization intended to help small business entrepreneurs find loans and set up financial structures and practices that will help them grow,” says Jennifer Taw, associate professor of government at CMC and faculty advisor to the group. “In-Lend Fund is working with both Kiva, and a more local lending organization, Valley Economic Development Center (VEDC), to connect small business entrepreneurs in the area with loans they otherwise might not have known about.”
The exposure is giving students real-world challenges, from which they learn firsthand about existing business and lending practices, Taw says. They’re learning to really think about the conditions under which micro-lending and financial support to small businesses are best implemented, and about their own value in the process.
“Committing this time and effort to promote development in the area–– working with local small business entrepreneurs–– creates concrete community ties, gets the students well out of the CMC bubble,” Taw says. “This allows them, in a very pragmatic hands-on sense, to see how things classroom learning plays out, even in the world right around them.”
In-Lend Fund’s current membership is at 22, with more students expected to join in fall, when applications become available. Applicants go through an interview process. “Because this is a student-run MFI, we require members to be students, but we partner with advisors and other microfinance practitioners to execute some of our services,” says Jessica Barreno ’16 who works as a community impact associate with the Community Impact Team (a sub-team of In-Lend).
We asked Barreno, a government and history dual-major who’s studying economics at the London School of Economics and Political Science next year, and fellow In-Lend team member Rhea Jain ’15, about the weekly microfinance web seminars hosted on campus, but conducted by Stanford University.
What is the goal of the Fund?
Barreno: Many of America’s inner cities struggle with high unemployment, crime, and poverty rates. Meanwhile, hardworking entrepreneurs working as parttime cooks, handymen, and seamstresses strive to succeed, but lack the capital, customer base, and financial skills necessary to manage and grow their businesses. These are the people we want to help.
By providing resources that are otherwise difficult to access or are unavailable, we strive to decrease the number of under-banked and unbanked Pomona community members to 18 percent, and 10 percent, respectively. Some services include weekly financial literacy classes and credit building workshops, micro-loans through Kiva-Zip, and financial consulting services for small enterprises. (www.inlendfund.org)
By providing these services, we also aim for the members of In-Lend Fund to develop their problem solving skills through assessing risk, carrying out due diligence, analyzing enterprises, working with clients, and teaching community members. These experiences enable the students to overcome challenges and build their problem solving skills by applying what they learn in classes.
How much of a student initiative is this, and how are you raising funds? Barreno: The In-Lend Fund is an entirely student-initiated and student-run organization. We also are members of Lend for America. Presently, we receive financial support from ASPC. We have also invested our own money into the organization. Kravis Leadership Institute has sponsored our conferences, where our team leaders have networked with several other MFI's across the country. We submitted an application and were approved to be recipients of the CMC President's Fund, and are reaching out to Alumni Funder.
Can you share a successful “case study” success in the community thus far? Barreno: One of our clients, Irma, endured a rather tumultuous childhood that included exposure to drug and gang activity in her local community. However, she was able to overcome these obstacles––including homelessness for a short period––and began her business endeavors selling diet pills and tablets. She has received a loan from our partners, Kiva Zip. This loan has enabled her to develop her own business, as well as set an example for her family and community members. (President of Kiva Zip, Premal Shah, is a speaker in the Stanford simulcast).*
What do you want to achieve in inviting people to watch the Stanford-led “webinar” on CMC’s campus? Barreno: Microfinance is a course mostly taught in business schools. Undergraduates have few opportunities to engage in its promising model, so our goal with this seminar is to expose the 5C undergraduate community to its unique structure, its fast growth, and the backlash it's experiencing. We then will discuss impact investing, how it builds on the foundations of venture capital investing, and how it is different, plus some specific skills that investors and entrepreneurs need. This course features input and advice from successful practitioners, entrepreneurs, professors, and institutions around the world, who also aim to alleviate poverty within their respective communities. We want to educate and inspire exploration of these and other, deeper topics.
What do you hope to achieve long term with the micro-financing project? Barreno: In the long term, we aim to reduce the under-banked and unbanked rates in Pomona. We are also working to expand into other communities in the Inland Empire.
How is this project a boon for students vis-à-vis teaching them skills that will be of future benefit?
Jain: First, leadership trends indicated that knowledge of microfinance, entrepreneurship and international development will become not only desirable qualities but vital in business leaders. The importance of international development stems from a change in public opinion that is increasingly pushing corporate responsibility onto the boardroom agenda. Preparing students at The Claremont Colleges for this new global leadership constitutes one of In-Lend Funds’ goals. In-Lend Fund will prepare our students to be more socially-minded leaders in business, law, and government after leaving Claremont.
Second, In-Lend Fund is a Lend for America member. This membership gives us the opportunity to network with practitioners, and students, which will provide plenty of rich networking outlets. Representing Claremont McKenna’s leadership spirit, we will actively network with leading policy makers to cultivate lasting relationships. Additionally, we plan to share these networks with the Kravis Leadership Institute, to assist in the planning of future Kravis-de-Roulet conferences. The contacts we make at this conference can be added as friends of the College, and provide a plethora of knowledge and opportunities for future CMC students.
Overall, the experience we will gain from In-Lend Fund will be beneficial to the Claremont community, as we will share our experiences and connections through databases and discussions.
As globalization rapidly increases, awareness of entrepreneurship and microfinance serves as an important tool for any future leader. In-Lend Fund will allow us to provide students at the Claremont Colleges with this tool, which will undoubtedly serve as a huge advantage in their post-graduate lives.
*The seminar (“Microfinance Impact Investing Gender”) is a simulcast by Stanford University. It will be broadcast from April 3-May 8 on Thursdays from 4:30 to 6 p.m. in Kravis LC62.