Why Microfinance Isn’t on the Tip of Everyone’s Tongue (But Should Be)
For me, heading home for the holidays (most recently Passover/Easter) always means running into old friends. I’ve grown used to the small talk, but the “What do you do for a living?” question still makes me wince. Working in U.S. microfinance, an industry that is still relatively under the radar, makes it hard to give a straightforward answer.
Microfinance has been proven to help small business owners increase family incomes, revitalize communities, and create sustainable businesses (see AUSA’s Microtest study for the most recent data)—essential factors in helping our nation through the current financial crisis. Why, then, isn’t microfinance on the tip of everyone’s tongue?
1. Microlenders are the new kids on the block. Other small business and development strategies have been around longer than microfinance, which came to the U.S. in the early 1990’s. The SBA, on the other hand, got its start in 1953—four solid decades before the first U.S. microloan was made.
2. We lack capital too! A big-budget ad campaign could quickly earn AUSA recognition. However, dollars are scarce and must be focused on supporting lending activities. We’re forced to do the best with the limited resources we have – which have so far allowed us to reach less than 1 percent of microentrepreneurs nationwide.
3. We’re overshadowed by our international counterpart. U.S. microfinance grew from the success of the strategy abroad, and has since remained in its shadows. It’s no wonder that the average neighborhood small business owner isn’t knocking down microlenders’ doors when they are best known as “lenders to the poor,” providing loans as little as $50 to rural entrepreneurs in developing countries. (Fact: AUSA microloans average over $6,000 and are provided to business owners from a variety of economic backgrounds!)
Microfinance is based on a trickle-up effect—by supporting Main Street businesses, our economy as a whole benefits. The concept works with awareness too—if people start the microfinance conversation in their community, eventually city, state, and local governments will get word. And then, perhaps my third cousin’s ex-wife will finally understand what I do for a living.