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
Sorry America, But 10 Million Businesses That Can’t Get Loans Isn’t “Normal”
So, word on the street is 90 percent of economic forecasters report that the recession will come to a grinding halt by the close of 2009. That’s good news for consumers, business owners, and ACCION USA’s microentrepreneurs—the group most dear to this blogger’s heart.
For American microbusinesses, the glass has always been half empty
But frankly, these were not the first thoughts that crossed my mind when I heard the news. My immediate reaction was one of panic–with the economic gloom almost over, what am I going to have to blog about? Credit will be more plentiful, increased consumer spending will mean less of a struggle for ACCION USA’s clients, and things will go back to normal—all boring topics, in my glass-is-half-empty opinion.
But “back to normal” is the catch. I had to remind myself that even before the recession hit, a significant segment of businesses lacked access to sufficient capital for reasons that had nothing to do with the credit crisis. Small loan requests, insufficient credit histories, and short lengths of time in business have always been challenges for microentrepreneurs.
According to my favorite statistical source, AEO, there were over 10 million small business owners that could not access small business loans even before the economic crisis. If that continues to be the norm, our nation’s small businesses are still in it for the long haul.
So, the moral of my story is that recession or not, business owners still lack capital and I’ll rest easy knowing that I’ll still have sufficient microfinance blog fodder. I hope that one day, neither will be true.