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Nurturing micro-businesses in Katrina’s aftermath
By DUANE M. ELLING
By most accounts, 50-year-old Victor Humphrey is a determined and resilient man.
For years, this resident of Biloxi, Mississippi, has held multiple jobs to make ends meet. When Hurricane Katrina raged into that city on August 29, 2005, Humphrey stayed to protect his property. And even as the storm’s flood waters engulfed his home, he refused to give in to despair.
“I watched the water take almost everything I’d worked for,” he said. “But I knew if I held on, I’d make it through.”
Today, that same resolve is helping Humphrey pursue a new life opportunity — opening a restaurant in his beloved city.
Humphrey and his business partner, Walter Craft, launched Frenchie’s Café on Biloxi’s east side in December 2006. And they did it with the help of micro-enterprise programs at Enterprise Corporation of the Delta and Hope Community Credit Union (ECD/HOPE).
A micro-enterprise is a small business — owned either by an individual, family or through a formal partnership — that has fewer than five employees and is started with less than $35,000 in capital. Owners often lack the formal business experience, collateral and credit history required to access traditional sources of financing.
 Victor Humphrey |
ECD is a private, nonprofit community development institution serving economically distressed areas throughout Arkansas, Louisiana and Mississippi, as well as the city of Memphis, Tennessee. It also sponsors HOPE, a community development credit union providing financial products and services to low- and moderate-income families in the same region. Both organizations are based in Jackson, Mississippi.
Their partnership, launched in 1994, has generated more than $300 million in financing for local micro-entrepreneurs, such as Humphrey and Craft, as well as homebuyers and community development projects.
A one-year, $500,000 grant by the Mott Foundation in 2006 to ECD is expected to leverage up to $2 million in micro-enterprise loans specifically for low-income residents whose homes and other assets were destroyed in 2005 by hurricanes Katrina and Rita. To date, ECD/HOPE has helped make 24 loans — totaling over $206,226 — to those individuals and families.
The two organizations also launched a collaborative with ACCION USA to help underwrite the loans.
ACCION International and the U.S. ACCION Network — which includes ACCION USA — are private, nonprofit organizations providing financial services to low- and moderate-income households in this country and around the globe. Collectively, they are the largest source of micro-enterprise loans — with active accounts totaling $5.4 million in 2006 — in the U.S.
Mott has invested more than $45 million in micro-enterprise activities since 1984, supporting efforts to help low- and moderate-income households launch new businesses, and to strengthen the field via the development, replication and formal evaluation of effective models.
The important role to be played by micro-enterprise is evident along the Gulf Coast. Numerous businesses were severely damaged or destroyed by the hurricanes, leaving thousands without jobs. More than 18 months later, many residents — especially those in low-income neighborhoods — remain unable to find employment.
For some, says William Bynum, ECD/HOPE president and CEO, starting a small business can open new doors of opportunity.
“Every aspect of the business sector was disrupted by Katrina,” he said. “Micro-enterprise can help fill those gaps while providing low-income families with additional income and the chance to participate in the redevelopment of their communities.”
Issues of staffing, marketing, inventory and distribution can also be daunting to many would-be entrepreneurs. And finding the resources to address them may seem particularly difficult in communities still struggling to rebuild after the storms.
Yet, doing just that is a key focus of ECD/HOPE. The two organizations work with local faith- and community-based groups to conduct outreach activities to those affected by the hurricanes. And each offers small business owners continuing technical assistance and services.
Frenchie’s Café has benefited from this multi-level approach. ECD/HOPE staff worked with Humphrey and Craft in exploring their financing options, and with ACCION USA in securing the two men a startup loan.
Bynum notes that such collaborations may provide important lessons for the future of micro-lending.
“These partnerships allow us to deploy staff and capital more efficiently, and focus on areas where we can add the most value,” he said. “That maximizes our ability to help small business owners and their communities.”
Standing amid customers enjoying plates of red beans and rice, catfish and shrimp, and the increasingly popular “Frenchie Burger,” Humphrey and Craft have come to recognize their own capacity for facing life’s challenges.
“When things start looking down, I remember the hurricane,” Humphrey said. “And I know if we could make it through that storm, then this will work out.”