21% of Black women in the United States live in poverty1, according to the National Women’s Law Center. Systemic exclusion of Black women in the financial system is one key driver in this crisis—and Grameen America is on a mission to do something about it.
Founded in 2008 by Nobel Peace Prize winner Muhammad Yunus, Grameen America, Inc. (GAI) is the fastest-growing microfinance organization in the US. Its unique microloan program helps low-income women obtain capital funding they wouldn’t be able to access through mainstream financial systems. These small loans have enabled thousands of women to lift themselves out of poverty through entrepreneurship.
GAI provides loan recipients, or “members,” with financing and a high-touch support network with other women entrepreneurs. Elsewhere, these women could become targets of predatory lending practices and high-cost capital sources. Many have been forced to deplete their personal savings accounts to fund their businesses, resulting in increased debt and credit issues.
By the end of 2020, GAI had disbursed over $1.76 billion in loans and boasted a 99% repayment rate. But while the program had served 130,000 women members, only about 650 of them were Black. This inspired the new “Elevating Black Women Entrepreneurs” (Elevate) initiative. GAI was determined to create a viable model to expand financial inclusion to Black women entrepreneurs across the US. This required understanding the unique needs and challenges Black women entrepreneurs face—and how GAI could better support them.
GAI partnered with BCG to identify the causes of low Black women entrepreneur engagement and retention, develop solutions to these programs, conduct market sizing research, help connect Black women entrepreneurs to affordable business capital, and more.
To assess gaps in the current model, BCG conducted two surveys. The first external survey was distributed to low-income women entrepreneurs across the US to understand the needs of different entrepreneurial groups. A second internal survey of current members identified opportunities for improvement in the member journey. These surveys provided data-based insights to inspire a positive path forward.
The surveys uncovered three critical revelations:
To understand the scope, BCG conducted market sizing research and found there was an eligible pool of 1.4 million low-income Black women in business with limited access to credit. This information was critical because it provided a baseline understanding of the opportunity for penetration.
Grameen America’s Division President Alethia Mendez said, “BCG’s research on target market provided the baseline for understanding the opportunity for penetration.”
Now armed with data-driven insights, GAI’s next step was to develop solutions and create a comprehensive action plan. The action plan included a long-term roadmap for the future. Potential new cities were evaluated, and made the cut if they had:
Existing locations in Harlem, New York and Newark, New Jersey already matched these criteria and were used in lean testing to inform future launches. After that, iterative testing would be performed to make the program even better.
This approach ultimately helped GAI secure a $9.5 million grant from Blue Meridian Partners. This essential funding for Black women entrepreneurs will support Elevate’s first 3-year phase.
GAI and BCG worked together to design a new pre-loan pilot to support Black women entrepreneurs and improve their credit profiles. This program provided advanced education on loan and financing options, credit scores, budgeting, business plans, and more—all under the umbrella of building a profitable business.
To recruit more experienced staff, GAI connected with local communities for their help in finding the best candidates. The Black demographic needed leaders, coaches, and mentors with high levels of experience and enthusiasm working for low-income communities. BCG helped GAI expand the types of businesses they could support by hiring staff with competencies that were more compatible with this group’s needs.
Building trust was next. GAI worked with local partners like business associations, faith groups, and financial institutions to accelerate its acceptance in new regions. BCG helped identify partner organizations in target cities and vet these partners for their interest, feasibility, and potential partnership structure. These partners became vital collaborators for outreach, staffing, and onboarding.
The first two cities were chosen: Memphis, Tennessee, followed by Atlanta, Georgia. Today, Elevate is expanding into a full network of southeast branches—utilizing the strategy originally built by BCG.
Detailed planning allowed GAI to hit the ground running. The Memphis branch opened in under 12 months—an impressive accomplishment. Revealing the importance of community partnerships helped fast-track this launch.
“Grameen America’s goal to help 80,000 Black women entrepreneurs in 10 years has been made possible through our partnership with Boston Consulting Group,” said Andrea Jung, President & CEO of Grameen America. “We are truly grateful for Boston Consulting Group’s insights, hard work and dedication to Grameen America’s mission. Their exhaustive efforts and forward-thinking strategies will help us create lasting change for Black women entrepreneurs now and far into the future.”
Grameen America and Boston Consulting Group have proven that change is possible. Together, they’re accelerating upward mobility in Black communities and transforming the face of entrepreneurship.