In David vs. Goliath, Microfinance the Slingshot
Bloomberg Businessweek has a terrific article this week about microlenders stepping in to fill the credit gap created by decreased lending to small businesses among mainstream lenders. The piece focuses on ACCION USA and Opportunity Fund, as two of the larger U.S. microlenders. 
The article pulls in great stats from the Aspen Institute, which tracked increases in U.S. microloan applications at 66% of lenders over the past two years, as well as an aggregate $68.6 million lent in 2008. (In the Tooting-our-Own-Horn Department: U.S. ACCION affiliates lent a combined $31.4 million in 2008 – or 46% of the industry total reported by the Aspen Institute.)
Growing along with demand are interest in and support for the industry. Over 700 individuals (including California First Lady Maria Shriver) attended the first national microfinance conference last month, and donations from private individuals are up.
All of this is helping to unlock the potential of the field; and more importantly, that of the small businesses it aids.
As William Ortiz-Cartagena, microfinance borrower and owner of a San Francisco parking company, put it, “It’s like David and Goliath, and Opportunity Fund is my slingshot.”
Read the full article at Businessweek.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