As the head of one of the nation's largest microlenders, Gina Harman is leading the charge to expand the availability of credit to underserved communities in this country.

Just don't say she's helping poor people.

"It is true that microfinance is a means of lifting people out of poverty, but it, in and of itself, will not get the job done," Harman, the president and chief executive of the nonprofit microlender Accion USA, said in an interview last month. "My concern is that this rush of public awareness does not make us yesterday's fad. The American population can be a little fickle, so I don't want to be fashionable. I want to endure."

That concern has been heightened during the past few years, as more players entered the still-developing U.S. microfinance market, and the recession brought new obstacles — and opportunities — for microfinance specialists working with traditional lenders.

As the banking industry comes out of the recession, Harman has looked for ways to extend credit to entrepreneurs through partnerships with traditional lenders, others in the microfinance field and federal agencies like the Small Business Administration.

Harman joined Accion USA, an affiliate of the global nonprofit Accion International, as CEO in 2008. (She had been on the board of Accion New York and New Jersey, which became part of Accion USA, since 2001.) Previously, she worked for 23 years at her father's electronics company, Harman International Industries Inc. When she joined that company, shortly after it went public in 1985, she had only expected to work there a few years.

"The moment was right for me to leave," Harman said. As president of the consumer division, "I had managed a $600 million company, had benefitted from that financially, the company was about to begin a significant leadership transition and Accion New York needed a CEO. Seemed like the stars aligned."

From her New York office, Harman now oversees part of the Accion network of state offices and licensees, which have offered more than $272 million in loans to 30,000 small businesses over the past 20 years.

In an interview last month, she gave a frank and nuanced assessment of the microfinance industry in the U.S., which is underdeveloped by international standards — and somewhat splintered in how it markets itself to potential customers and partners.

While some pedigreed new microfinance specialists have lent mainstream buzz to the U.S. industry, many of them still use the rhetoric of fighting poverty, which Harman said she and her Accion colleagues are "quite conscious" about avoiding.

"I think if we cast ourselves in the language of, 'We solve poverty,' we become part of the big universe of antipoverty fighters, without a big, systematic, programmatic way of describing how we do so," she said. "If microfinance is the answer to every question, we're going to answer no questions — and that's why I want to stay focused on small business."

Prominent microfinance specialists like Grameen America Inc. and Kiva Microfunds generally offer smaller amounts, often to lower-income consumers, than Accion, and they market the loans as helping to "alleviate poverty."

"We compete for share of mind, but we don't compete for clients," is how Harman describes the relationship between Accion and Grameen, which has opened two U.S. offices since 2008. (Despite its short history, Grameen's ties with its namesake in Bangladesh — a microfinance trailblazer and Nobel Peace Prize laureate — has garnered it much attention.)

"We speak to different elements of a very similar community," Harman said. "In the best of all possible worlds, the Grameen graduates should be eligible for a feeder stream to Accion."

Stephen Vogel, Grameen America's CEO, said by e-mail that it "focuses on providing small loans to people living at or below the poverty line. … Accion is an excellent next source of capital for our borrowers and their businesses."

Even when Accion partners with other microfinance organizations, mixed messages can complicate business for both parties.

Accion has a partnership with Kiva, which posts photographs and profiles of microloan recipients on its Web site and then solicits contributions for what Kiva calls "lending to alleviate poverty."

Harman, while praising Kiva for being "masterful players in social media" and "a marketing machine," also called the partnership "an interesting learning experience" for Accion.

"As close as we are to our clients, we didn't anticipate that somebody might not want to be on the Kiva Web site, because Kiva says they're serving the poorest of the poor, and our clients don't want to be identified as the poorest of the poor," she said. "We had clients saying, 'We'd love to help you out, but I don't want my picture up there with a big sign over my head saying, "I'm poor." ' "

Premal Shah, Kiva's president, acknowledged "a good, healthy tension" between the language of poverty and that of small business, especially as Kiva facilitates lending domestically and abroad.

"Unlike Ghana or Bangladesh … where it's clear that the people on our Web site are coping with some form of poverty," marketing is trickier in this country "because of the wealth, because there are small businesses that still can't get loans from banks," Shah said. "We have to be more thoughtful in the United States, because the U.S. microfinance sector serves a broader range of clients."

Though Kiva is "a poverty-focused site," Shah said, it "stresses entrepreneurship and business partnerships. We really try to stress the difference from the sort of Adopt-a-Child sites."

Microfinance in this country is also under external pressures as a result of the recession, which has sharply curtailed credit to consumers and small businesses. Organizations like Accion get some of their funding from banks, which have been pulling back from making such loans.

As a result, the recession has created more demand for Accion's products — along with a more complex relationship with some traditional banking companies.

Accion Texas, for example, has a groundbreaking partnership with Citigroup Inc., which buys some of its loans. And Harman said Accion USA is in talks with Morgan Stanley to create "a unique program" to help the Wall Street firm meet its new Community Reinvestment Act obligations as a bank holding company.

"We're not immune to the banks' lessening tolerance for risk," she said. Yet "as banks consolidate and they have larger CRA obligations, or have incurred CRA obligations for the first time, like Morgan Stanley, they're trying to figure out, how are they going to meet their obligations?" she said.

Morgan Stanley did not return phone calls seeking comment. In general, as Accion talks to traditional lenders, there is "one side of the house saying, 'We don't want to take any risk and these people don't make any money,' " Harman said. "And the other part of the house is saying, 'We have a public obligation, and these are the best folks out there, and they're capable of generating jobs and sustaining small businesses, we've got to find a way to work with them.' "

There are other potential sources of funding for Accion, which has some of its offices registered as Small Business Administration lenders, as Washington looks to expand the loans available through that agency. "There is an environment now to have a discussion that would likely extend [Accion] Texas' SBA license into Louisiana, and [Accion] USA's license into Georgia and Florida, and [Accion] New Mexico into Arizona and Colorado — and suddenly the SBA is dealing with 12 major urban populations through a single organization," Harman said.

Accion is also developing more products to offer to potential customers who might not qualify for a small-business loan. It is testing some reloadable prepaid card products that will report payment behavior to the credit bureaus (allowing the cardholders to build credit histories) and trying to build out its systems so that it can offer lines of credit to consumers who might not qualify for a small-business loan. "There is going to be an opportunity in the market. And if honorable lenders don't figure out how to fill it, unhonorable ones will, as they already have," Harman said. "I do believe that, increasingly, to serve the underserved is going to require many products, not just one."

All of these plans have continued to develop while Accion has yet to become financially self-sustaining, which Harman said is "absolutely" necessary. Yet she expressed some frustration with the expectation that organizations like hers should match the performance of for-profit lenders.

"What gets applied to microfinance organizations, unlike many not-for-profits, is because we generate a revenue stream that comes off the interest on a loan, we start to look and sound and feel like a for-profit, and people want to know when we're going to get profitable," she said. "And the very reason we exist is, the traditional financial institutions don't lend in this community. And they don't because they can't make any money doing it. So to hold us to the standard of making money is kind of a conundrum."

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