Author(s): Luz Gomez & Elaine L. Edgcomb
Conclusion:
With the debate raging on the international side around the role of for-profit MFIs, it is timely to examine what for-profit companies are already doing domestically. Clearly, the market for microloans has shifted over the course of the last three to five years as credit access from traditional sources has changed in fundamental ways. Organizations, some new and some old, have jumped into the microloan market — overlapping in some instances with entrepreneurs targeted by nonprofit MFIs. As new organizations surface, some with technologies and infrastructure to scale operations significantly, some show potential to be market leaders. Yet, it is important to note, many are not yet profitable, so the question of whether investors will stay engaged, and at what price, is still an open one.
As discussed throughout, however, their presence should provoke nonprofits to re-examine their position in the marketplace and consider carefully who they can best serve and why. At the same time, the approach that for-profits have taken with respect to methodologies, the use of technology, product and pricing features may offer some models for nonprofits to consider as they always seek to improve their services to those with the greatest barriers to credit access. Finally, the example of Opportunity Fund and Confianza raises the possibility that partnerships can help increase the aggregate number of entrepreneurs being served. It is our hope that these lessons and the framing of these market changes allow the industry to stay competitive in an ever changing environment.
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