Dora Azcaino had an awful experience with her first business loan in America.

Looking to expand her inventory of Avon products for her small business, Azcaino, a Mexican immigrant currently living in New York, borrowed $1,000 from a loan shark.

The loan, made six years ago, charged Azcaino a 20% interest rate that compounded weekly. Making just enough money to pay for her rent and loan payments, Azcaino was intimidated and left in an unenviable position.

“If they do not have the fear of people, nobody would pay the crazy prices that they charge,” said Azcaino. “Once you borrow money from a loan shark, you are no longer working for yourself. You are working for them.”

Today, with banks cutting back on small-business loans and an economy that many say is on the brink of recession, some microlenders are positioning themselves as alternatives for struggling immigrants whom could otherwise be preyed on by loan sharks.

“I think any time access to credit becomes impinged by anything, the likelihood that someone in crisis will turn to a loan shark increases,” said Gina Harman, CEO of ACCION USA, one of the nation’s leaders in microfinance. “We’re still lending. Business owners who need capital need to understand there are programs like ACCION that will make credit available.”

Like many other microlenders, ACCION focuses on providing capital to small businesses that lack strong enough credit histories to receive traditional loans.

Six years after her costly experience with a loan shark, Azcaino recently received a $10,000 loan from ACCION to expand her business.

“It’s true that the banks are not lending as much and it is hard to know what to do. So yes, people may be more willing to go to a loan shark, but that is only because they aren’t aware of other options available,” said Azcaino.

ACCION, which is a non-profit formed in 1991, receives its funding from a mix of government dollars and donations from banks, private investors and foundations. The U.S. ACCION Network has lent $230 million since its inception.

The microlender puts most of its emphasis on minority, immigrant entrepreneurs that are often threatened by loan sharks.

“In times of crisis people [still] need money to pay the inventory bill they have sitting on their counter in anticipation of Christmas,” said Harman. “If they can’t do that, they are going to turn to a loan shark as a source of capital.”

A Washington Heights, New York, clothing store owner interviewed by the New York Post last week echoed that sentiment, saying “I had no choice but to go to the street for money…If I have a bad week, I still have to buy inventory and pay rent -- and [the loan shark] is the one right now I can go to.”

The business owner, named Ramon, told the paper: "It's easy, quick and safe, as long as you come up with the weekly charge… But I have no choice. To a bank, I don't exist."

While bank may be unable or unwilling to satisfy these lending needs, microlenders have seen increased demand.

“We, unlike most lenders, will lend to somebody who has no credit history. The first step is to create one,” said Harman.

On average, ACCION loans $7,500 at a 14.99% interest rate over a two-year span. Those with little to no credit history may only receive $500 but more established borrowers can get up to $50,000.

Project Enterprise, a microlender that has also positioned itself as a viable alternative to loan sharks, doesn’t consider credit scores at all. Its average loan is just $2,000 and lasts for an average of one year.

“Believe it or not, it can have a life changing impact on a business owner,” said Arva Rice, executive director of Project Enterprise, which is headquartered in Harlem.

Project Enterprise has seen a sharp increase in demand due to the weakened economy and locked credit markets.

“We are on pace to make the most number of loans at the biggest amount of capital in our history,” said Rice. Project Enterprise was founded in 1996 and had nearly 400 active clients as of March 2008.

Project Enterprise has received more than $234,000 in grants and loans from the Grameen Foundation, the non-profit co-founded by Bangladeshi economics professor Muhammad Yunus, the 2006 winner of the Nobel Peace Prize.

Some immigrant small business owners are unaware of the exorbitantly high interest rates charged by loan sharks. The Post story cited a midlevel, upper Manhattan loan shark who said he charges $200 a week in interest on a $500 loan.

“I don’t think that’s fiction unfortunately,” said Harman, who said many clients don’t understand the interest is often compounded weekly. “That’s a hell of a way to learn a lesson about interest rates.”