Introduction to Microenterprise Telework Forum Follow-up July 14, 2009

What is Microenterprise Development (MDO)? A strategy to create jobs, alleviate poverty, support community development, and empower low income individuals (AEO). Very small business  Entrepreneurs with no access to traditional credit  Business education and capital Very small loans  Goals of poverty reduction community development and job creation

Microenterprise’s Beginning Dr. Muhammad Yunus  Grameen Bank begun in loans, $27 dollars  Awarded 2006 Nobel Peace Prize  Grameen-related organizations now in 40 countries

Microenterprise in the US Beginnings in 1980s Start or expand very small business  <$35,000 in starting capital fewer than 5 employees Varied organizational structure  Credit versus Training-Led  Independent agencies, or subsidiaries (often to CDFIs, CDCs, etc)  Range of services Credit products Education

Typical Microenterprises Retailers  craft shops, florists, used clothing stores Service suppliers  hairdressers, caterers, graphic design Manufacturers  carpenters, craft artisans, bakers

More Than Loans Goals of creating economic security, development and job creation.  Improving access to credit (raising scores) Ex. Credit builder loans  Personal finance and business training

Typical Microentrepreneurs Working poor People caring for families People with disabilities Public assistance recipients Immigrants and refugees Recently unemployed Source: Elizabeth Wilson, AEO

Client Demographics 78 % women 42% African American 81% with no college degree 47% with business sales under $1,000 per month Median income of $26,227 for poor and non-poor clients Source: Elizabeth Wilson, AEO

Who Provides MED Services? Microenterprise development agencies Traditional business development agencies Community economic development organizations Employment & training organizations Human services and faith based agencies Target group focused organizations Source: Elizabeth Wilson, AEO

Microenterprise Players Association for Enterprise Opportunity (AEO) State Microenterprise Associations  Program start-up  Monitoring, and evaluation  Training  Peer lending opportunities

Microenterprise Funding Source: Elizabeth Wilson, AEO

Where is the funding? Federal sources include:  SBA MicroLoan PRIME Women’s Business Ownership  Community Services JOLI  CFDI Fund at Treasury  CDBG Funds  USDA Intermediary Relending Rural Business Enterprise Rural Community Development Init.  HHS  ORR

Microenterprise Successes 49 percent Five year survival rate - comparable to the average for similar businesses 53 percent of poor entrepreneurs move out of poverty. Most doubled income over 5 years Estimated for every $1 invested in MED returns $2.5 (income for owners & employees, asset growth, reduction in public assistance, unemployment insurance costs, increased tax revenues Source: Elizabeth Wilson, AEO