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The University of Alabama

Find Your Passion: Too Good to Fail

By Michael Washington

"I've always been interested in money," says Bailey. "But more than just making it. I'm interested in how it's made, who makes most of it and who can make it." (Samantha Hernandez)

“I’ve always been interested in money,” says Bailey. “But more than just making it. I’m interested in how it’s made, who makes most of it and who can make it.” (Samantha Hernandez)

University of Alabama student David Bailey has an idea that is too good to fail, and it involves Alabama entrepreneurs seen as too small to succeed.

He hopes his newly-founded company, Forza Financial, becomes a force of systemic change in the lending industry.

Bailey, a sophomore majoring in finance and entrepreneurship, spent the larger part of his high school career and his freshman year at UA laying the groundwork for a social enterprise organization with the mission of helping micro-entrepreneurs throughout the state.

After assembling a portfolio on microfinancing – the process of lending small amounts to low-income, self-employed entrepreneurs –Bailey was puzzled the practice was not successful in the U.S. By instinct, he set out to prove it could work.

“Banks don’t traditionally lend in small amounts,” says Bailey. “If an entrepreneur with ideas of starting a small business wants a loan, the smallest amount they can usually get is around $20,000.”

For many small upstarts in Alabama, that amount is more than enough money, and banks raise interest rates because they see new businesses as risky investments.

“You can’t start a business with 70 percent interest on a loan amount that you didn’t really need,” says Bailey.

During his freshman year at UA, Bailey’s own company got the stimulus it needed. Many students in Honors College and the Culverhouse College of Commerce and Business Administration wanted to get involved.

In the fall of 2009, Forza Financial began.

"This wouldn’t be possible without the level of involvement I've seen," says Bailey. "It's exciting to see students so interested in helping the community." (Samantha Hernandez)

“This wouldn’t be possible without the level of involvement I’ve seen,” says Bailey. “It’s exciting to see students so interested in helping the community.” (Samantha Hernandez)

Its goal is to be a one-stop shop for entrepreneurs in Alabama by providing uncollateralized loans, competitive interest rates and consultation using a technique called group lending. The borrowers are placed on teams, which encourage them to rely on each other for funding. If one borrower defaults on the loan, the remaining members will be unable to get funding until a new team is assembled. That means the team’s unity is its collateral.

Bailey’s own team consists of students like Austen Parrish, Alex Murray and Matt Miller. They have the support of UA faculty and staff like Dr. Barry Mason, dean of the Culverhouse College of Commerce and Business administration; Lou Marino, professor of management and marketing; and Dr. Shane Sharpe, dean of Honors College.

“This wouldn’t be possible without the level of involvement I’ve seen,” says Bailey. “It’s exciting to see students so interested in helping the community. I could have said, ‘this is too ambitious,’ and quit one month in, but I was able to feed off everyone else’s energy and enthusiasm.”

Last summer, Bailey and his team worked with entrepreneurs in Marion, as a part of Honor’s College Black Belt Experience. Bailey says banks in the area “don’t do” small loans. The team believes that communities of this size in the current economic climate are perfect for microfinancing.

The group is working to assemble a lending group of six entrepreneurs, then develop business briefs and individually itemized budgets for microloans. Once borrowers have each established a sound credit history, they have a better chance of securing larger loans with lower rates. While Bailey and his colleagues hope to start the process soon, their focus is on designing a system that is replicable.

“We’re being careful,” says Bailey. “We can be overly ambitious and fail, but we don’t want to start some club with no results.”

Forza has interested investors and is receiving advice from successful venture capitalists. The students’ own company has its destiny firmly in its own hands — a bright future that did not always come easily.

“We’ve seen challenge after challenge, and everything seems to take twice a long as expected,” says Bailey. “Nothing has come easily.”

But Forza Financial has already accomplished more than David Bailey planned when he first contemplated the idea of beginning the for-profit/nonprofit hybrid. With growing interest from students at UA and support from members of the financial industry, all signs point to success.

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This story is part of the Find Your Passion series. To learn more about how you can find your passion at The University of Alabama, please visit UA Undergraduate Admissions.

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