ANNA: My name is Anna Cohen and I am a designer, a fashion designer. I have a line of environmentally responsible fashion apparel. I got my studio in April of 2005. The fashion industry needs to change because the processes that we’ve been using for many, many years have been very taxing to the environment and to the people who work on the product. And that is because the dyeing process leaves lots of extra chemicals and heavy metals in the water and it’s very hard to do the processing to get that clean again. My understanding is that lots of businesses fail.

GRAPHIC TITLE: 40% of new businesses fail in their first year.

ANNA: I have to find cash flow for this business to continue moving forward, so I need money. I’ve done a little research and I am going to go meet with these people at Mercy Corps. They are doing this project here in Portland to support small business, so we will see what happens.

KWAME: Mercy Corps is a microfinance institution, one of many operating in the United States and around the world. Microfinance, or microcredit, means very small loans - as low as $100 to help small businesses. Sometimes having just a little extra money to buy supplies or better machinery can make the difference between not making it, and succeeding as a business. The big difference between microcredit and bank loans is that microfinance loans carry much higher interest rates. Interest is basically a fee that the lender charges the borrower for proving them with credit, or cash up front. When the borrower pays back the loan, she pays back the amount she borrowed, plus interest. Microfinance institutions charge higher interest because they are taking a big risk by lending to new, small, or struggling companies. With smart financial management, small business owners like Anna can use credit to achieve goals that would otherwise be out of their reach.

MAGGIE: What kind of needs does your business have, and what are you looking to use the funds for?

GRAPHIC TITLE: Loan Program Officer, Starting Salary: $35,000, Education: College, Work week: 40 hours.

ANNA: I am looking for help for developing the spring line, so that means getting sale samples together, pattern making, sample sewing and then going into development and production.

MAGGIE: I think the loan program would be the best fit for you.

MAGGIE: Microfinance and microcredit has a proven impact on the community. People who are in the area of microlending are able to disburse small amounts of money to small businesses…

LOWER THIRD: Maggie Reilly Mercy Corps Northwest …and a little bit of money can really have a huge impact on a small business.

MAGGIE: The way it works is that each month you will be paying a certain amount of money back to us. Some of which will be the principal, and so what that is, is just the amount that you’ve borrowed.

GRAPHIC TITLE: Loan repayment: principal + interest

MAGGIE: As you pay down what you’re borrowing the amount of interest that your paying will also decrease.

KWAME: Before Anna’s loan, can be approved she attends classes to learn how to manage her finances responsibly. Then her loan application goes before a committee of finance professionals, who comb through it to make sure she is a worthy applicant for credit, meaning that she will have to pay back the loan with interest.

MAGGIE: We try to mitigate our risk by looking at the different… Graphic Title: Risk: likelihood that a loan will be paid back. … factors, looking at the person’s track record and history to see if this is a person who is going to pay us back.

ANNA: All right.

GRAPHIC TITLE: Anna signs her loan application.

ANNA: I need this loan. There really is no other choice.

GRAPHIC TITLE: Loan Committee Meeting Mercy Corps.

MAGGIE: So the first loan that we are going to be looking at today is for Anna Cohen, owner and president of Anna Cohen LLC.

LOAN COMMITTEE MAN: I noticed in the write-up that she has an excellent credit history and rating.

MAGGIE: One of the things that we look for as lenders is to see that somebody has a credit history. And so it’s important for young people to build up a credit history by maybe having a car loan or student loan payments and paying that every month so that lenders can see, yes this person does exist, and yes this person does have a track record of using credit wisely.

MAGGIE: There are no derogatory items or missed payments that we saw in her credit report. She is proposing to have an increase in business income and so that will also help her to pay off those debts.

MAGGIE: There are a lot of different things that contribute to somebody having bad credit. Even paying your credit card…

GRAPHIC TITLE: If you pay your ENTIRE credit card bill on time every month, you will not pay interest. …late one time can put a ding on your credit report. So if you make a mistake today, it’s going to follow you for a really long time, and that’s another reason why it’s important to establish yourself, but do it well and to pay off that credit.

MAGGIE: So can we have a motion for approval, all in favor…

LOAN COMMITTEE: Aye.

MAGGIE: Excellent.

ANNA: I just got the call, I just got the loan and that means that I get to move forward and start with the spring line, I’m very excited.

MAGGIE: We want to make sure that there is money coming into the business, because we want to make sure that sales are occurring. It would be setting somebody up for failure if we made a loan to a business that wouldn’t be having any income.

ANNA: I am exhausted.

Graphic Title: Mario’s Boutique Sales Team Training Session.

ANNA: I use organic cottons and hemp and bamboo, like this fabric, it’s actually 100% organic cotton and it is color grown, so the actual natural fiber color is where the stripe color is coming from.

SALESPERSON: I’m sold.

ANNA: For me it’s been very exciting to see, it’s actually profitable! Wow! I am so happy about how everything has gone; I feel like the universe is saying, “Yes, you are doing the right thing.” It’s very rewarding.

GRAPHIC TITLE: With income from increased sales, Anna expects to pay off her loan in four years. Her Spring 2007 line has earned her praise in the fashion industry.

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