Citigroup Inc. has entered a five-year contract with Accion Texas, a San Antonio nonprofit loan provider, to purchase up to $30 million of micro-enterprise loans.
The New York company said the contract would give Accion Texas the capital it needs to expand and become Citi's national service provider, handling underwriting, servicing, and collections. Citi and Accion Texas would share the risks and the revenue.
"This will lead to wider and more innovative access to finance for U.S. microfinance institutions," Robert Annibale, Citi's global director of microfinance, said in a press releae. "Accion Texas has significant experience in supporting emerging micro-entrepreneurs, both through business development services and by providing these enterprises with often their only source of formal access to financing."
Steve LaFredo, marketplace director for Citibank, said, "Our goal is to transition underserved and even unbanked entrepreneurs to valued banking clients."
Founded in 1994, Accion Texas provides loans to small-business owners who cannot secure access to commercial credit. It has made more than 9,000 loans worth $70 million to more than 6,000 clients.