In the United States, microlending is often achieved through credit cards because formal microlending is too expensive administratively for traditional banks. But many of the neediest people don’t have credit histories, and credit cards have very high interest rates.
The Clinton administration introduced a microloan program to be administered primarily by nonprofit organizations that interfaced directly with low-income communities. Since then, the Bush administration has repeatedly zeroed out the microloan budget.
Fortunately, bipartisan support in the Senate, led by Sens. Olympia Snowe (R-Maine) and John Kerry (D-Mass.), restored funding — a mere total of $2 million for fiscal year 2007 in direct loan funds (used to leverage another $28 million of private money) and $10 million in microloan technical assistance.
In 2005, the Small Business Administration-backed microloan program resulted in 2,474 loans averaging $13,042 and totaling over $32 million. About 45 percent of the loans went to women.
You can help support microlending in the following ways:
• Encourage groups in your community to start and support microcredit programs.
• Donate to microcredit organizations.
• Spread the word. Tell your fellow entrepreneurs and members of community, religious, or ethnic groups.
• Urge your elected officials to support the U.S. microloan program.
You’ll find a directory of microenterprise programs in your state, along with other resources on microcredit, at the Aspen Institute web site.
Microcredit works. Muhammad Yunus and Grameen Bank have proved that helping hard-working poor people borrow small amounts of money to start their own businesses can change a community — whether in Bangladesh, Boston, or Boise.
Photo by Microsoft.
Catherine on January 24th, 2007 at 10:24 am
Thanks for the great information! As a person who is about to start a business, it’s important to find out other financial resources.