Microfinance Week in Review: Week Ending January 29, 2010
Some of the week’s news in the microfinance, green business initiatives and the small business sector:
- Surge in Loans Is Unlikely From Small-Business Plan- Wall Street Journal
- ACCION USA in the News: On the Books – Can tapping into the informal economy improve the lives of the urban poor? - American Prospect
- ACCION USA in the News: Brewing the American Dream- CNBC
- Microfinance- Greeniacs.com
- Struggling, and Seeking Hope in President’s Words- New York Times
Please Mr. President, More Support for Microloans
“The true engine of job creation in this country will always be America’s businesses,” said President Obama in last night’s State of the Union address.
While I couldn’t agree more, I wished that the President drew increased focus to America’s microbusinesses — the “mom-and-pop” establishments (typically with fewer than five employees) that are the lifeblood of communities nationwide. These are the businesses that start when “an entrepreneur takes a chance on a dream, or [when] a worker decides its time she became her own boss.”
Mom-and-pop microbusinseses are the true drivers of job creation.
Eighty-seven percent of all American businesses are, in fact, microbusinesses, which represent 18 percent of all U.S. private employment (according to the Association for Enterprise Opportunity). These are the businesses that have proven to support job creation in previous economic downturns, and will be the businesses that guide America out of the current recession.
President Obama’s pledge of $30 billion in funding to help community development banks get critical capital into the hands of small business owners is a step in the right direction for American microbusinesses. It will be a bigger, stronger step in the right direction if microlenders like ACCION USA are included as part of the solution along with community banks. We are ready, and a proven path to deploy loans to deserving business across the country.
Regardless, the President’s commitment to small businesses was abundantly clear, and the importance of ACCION USA’s work with small businesses in good and bad economic times was reinforced. We’ll renew our focus on getting more attention in Washington for microlending programs, and remain committed to the small businesses we serve.
Aftershocks for Miami’s Little Haiti for Many Months to Come
ACCION USA's Little Haiti, Miami-based clients are among those mobilizing to help Haiti recover.
From loan consultant Joann Milord in Miami.
It is more than one week later and the images on the TV have not changed. Haiti is still in chaos and people continue to die daily. I turn on CNN every chance I get to watch the latest news, the most recent rescue, or the updated death toll. I’ve never experienced anything close to such a traumatic event and cannot even imagine what the people of Haiti are experiencing. Speak to anyone in Haiti now and they tell you what you see on TV is not even close to the reality of the amount of suffering.
Every Haitian has been affected by this earthquake, no matter where you live in the world. I see it here up close in Miami’s Little Haiti—home to the largest Haitian immigrant community in the nation. Our families have either lost members, friends, colleagues, businesses or homes. We are all victims and heroes as we scatter to collect water, food, clothing and medical supplies. Those that can, add names of the missing to list on the Internet or send messages on Facebook. What about those who can’t or don’t know how? How are they able to find out about their families without access to electronic communication? They turn to fellow Haitians for assistance.
One thing is evident in Miami, Haitian organizations, government officials, and individuals are working hard to provide support to their homeland. Whether it is done collaboratively or independently, it is done with great momentum, love and dedication. Everyone has the same goal of progress for Haiti. After these immediate needs are met, then the process of rebuilding livelihoods is the next step. Hopefully this passion will continue and drive efforts to build a better Haiti in the near future.
Microfinance Week in Review: Week Ending January 22, 2010
Some of the week’s news in the microfinance, green business initiatives and small business sectors:
- Lending small biz a big hand: Microlender Accion USA fills void with local entrepreneurs- New York Daily News
- Microlenders Making a Big Difference- The San Diego Union Tribune
- The first small business loan of the year goes to …. - CNN
- Green Banks Offer Mega-Bank Alternative- Sustainable Business.com
Delicious Caribbean Dishes, As Seen Online!
On Sunday an authentic Caribbean eatery in Manhattan serves up Bintou’s Famous Pepper Soup and on Monday, try Sauce Arachide (Peanut Butter Stew w/ Beef), each for just ten dollars. Unless you lived near or strolled by ‘New Ivoire Restaurante’, you probably wouldn’t have ever visited the delicious spot… until now! With the help of a volunteer and Yola.com, restaurant owner and ACCION USA client Cheick Cisse has a website that he hopes will bring in some extra business.
ACCION USA has a diverse base of clients ranging from small local restaurants like Cheik’s to small, tech saavy media companies like Maureen’s, Moped Productions. But for many microloan clients at ACCION USA, a business website has often seemed too advanced, too expensive, or even unnecessary. Busy restaurant owners like Cheick simply don’t have time or the extra money to invest in web development.
ACCION USA struck an immediate partnership with Yola when we learned about the free web building tools that they were offering. And we began to think of simple and creative ways to introduce this service to our clients.
Lauren, an ACCION USA volunteer met with Cheick at his restaurant and was able to put together a simple and useful website. “I’m delighted I’ve been able to spend my free time volunteering at ACCION USA. It’s very rewarding to help clients at an organization that works so hard to empower people financially,” she says of the experience.
Now Cheick just needs a lesson on optimizing the searchability of his website on search engines like Google. Have SEO experience and interested in volunteering? Contact Erica Dorn edorn@accionusa.org, but first check out ‘ New Ivoire Restaurant‘ for a true taste of the Caribbean.
Microfinance Week in Review: Week Ending January 15, 2010
Some of the week’s news in the microfinance and small business sectors:
- Raiding the retirement fund to keep your business afloat- CNN
- Grameen Foundation plans relief for Haiti quake victims through microfinance- Microfinance Focus
- Gates foundation to fund credit groups- Financial Times.com
- Workshop and Networking Event for Food, Beverage and Hospitality Microentrepreneurs! – Boston.com
Survey Says … Microloans Working
Over 100 ACCION USA clients completed the 2009 MicroTest Client Outcomes Survey.
Despite an extremely challenging environment for small businesses during 2007-2009, the vast majority of ACCION USA clients managed to sustain their businesses, with many creating new jobs. So says a new report made possible by the hard work of two intrepid summer interns (thank you Max and Kathryn!) and the Aspen Institute’s MicroTest Client Outcomes Survey project. You can read the full report here.
To generate the data in the report, ACCION USA surveyed over 100 clients who had received microloans in 2007. We questioned them on number of employees, business contributions to household income, owners’ draw, etc. By comparing responses to those in the clients’ loan applications, we found several important longitudinal results, including:
- Job creation. Client businesses that received loans created or retained on average 2.4 jobs (not counting the owner), predominantly in low- to moderate-income communities.
- Wage increases. The median hourly wage provided by businesses owned by ACCION USA borrowers ($9 an hour) is 24% higher than the federal minimum wage.
- Business survival. 98% of existing businesses were still in business by year-end 2008 (compared to a national average of 70%).
2009 was a year marked by debate about how to measure the impact of microfinance in the developing world. Here in the U.S., MicroTest remains the gold standard for measuring client outcomes, and ACCION USA is pleased to participate in this project. We look forward to teaming up with the Aspen Institute once again in 2010. (And we’re looking for interns to help!)
Tags: Aspen Institute, impact, outcomes, recession
Microfinance Week in Review: Week Ending January 8, 2010
Some of the week’s news in the microfinance and small business sectors:
- ACCION USA In the News – WSBS-TV, Atlanta, GA
- ACCION USA In The News: One Way to Create Jobs – Parade Magazine
- Can Microfinance Make It in America? - TIME
- While Congress Dawdles Small Businesses Suffer - All Business.com
- Microfinance: Homegrown Jobs or Charitable Exploitation? – In These Times.com
ACCION USA Success Stories in the News: Everardo Branford
A couple blog posts ago, we profiled ACCION USA borrower Everardo, the owner of Branford’s Original Hot Sauce. Well, success stories spread quickly, and Everardo was recently featured on Primer Impacto, a Spanish-language news show airing on Univision.
For those who are fluent speakers or can at least muster up their high-school Spanish, here’s the segment:
http://www.univision.com/content/videoplayer.jhtml?cid=2224075
Profitability Not the Only Indicator of US Microfinance Success
The year’s first high-profile news piece on U.S. microfinance hit Time magazine readers over the weekend (Barbara Kiviat’s “Can Microfinance Make It in America?”). For an industry that once struggled to catch the ear of the general public, major media coverage is a great way to kick off the New Year. However, as some of the oldest U.S. microlenders—like ACCION USA—enter their third decade, my one hope is that journalists can stop asking whether they can have a lasting impact and start focusing on the fact that they already have.
In gauging whether U.S. microfinance organizations have staying power, it’s critical to include more than just one measure: profitability.
In gauging whether U.S. microfinance organizations have staying power, it’s critical to include more than just one measure: profitability. Finding a model that is self-sustaining happens through understanding the marketplace, hard work, innovation and a commitment to continuous improvement.
Ms. Kiviat failed to explore what makes all that effort worthwhile— statistics indicate that microfinance IS successful as a way to keep people in the United States out of poverty. Our most recent impact study indicates that each loan ACCION USA provides contributes to the creation or retention of 2.4 jobs. At an average loan size of $8,000, that makes microfinance among the most efficient source of jobs in the nation. Moreover, those jobs pay an average of 24 percent above the national minimum wage and allow business owners to increase household income by 6 percent. Building personal assets is a key to getting and staying out of poverty.
With over 10 million microbusiness owners in the United States lacking access to affordable loans, there is vast unmet need. We are dedicated to finding effective ways to reach those in need, to scale our work and to do so in ways that generate enough income to sustain ourselves. One might argue that’s a pretty damn good reason for microfinance organizations to stick around.
Today, we all raise money through contributions large and small, from individuals, corporations and foundations. Each understands that interest rates are set not simply to abide by the laws of the land, but to allow the mircroentrepreneurs to accumulate assets, not be drained of them. While our rates don’t compare to those charged in other markets, repayment of the loan with interest is the obligation of every borrower. Ask anyone who has sacrificed and worked hard to repay her loan if what she received from ACCION USA was a hand out and I bet what you will hear is it was a hand up.
Profitability is something that microfinance organizations strive for, but shouldn’t solely define success. Nonprofits can have strong, lasting business models, too.