By SHEILA BEACHUM BILBY
Scattered coast-to-coast, low-income entrepreneurs offer diverse products: batches of spicy salsa or sweet jellies and jams, well-crafted furniture, van or taxi services, child care or help with elderly shut-ins, graphic design, and handling medical billing.
But because they operate on the margins, many need help in unlocking the door of opportunity to escape poverty. They can find themselves tripped up by a spotty or nonexistent credit history, sparse business know-how, and limited or no access to start-up funds.
The micro-enterprise field in the U.S. will get a boost with a demonstration project aimed at dramatically increasing the number of low-income entrepreneurs able to successfully launch and grow small businesses. A micro-enterprise is a small business with five or fewer employees requiring less than $35,000 in start-up costs.
Eight micro-enterprise programs have been selected to try and expand their capacity to reach more entrepreneurs under the demonstration project, which is being run by the Aspen Institute in partnership with the Association for Enterprise Opportunity (AEO), the trade association for micro-enterprise programs.
The eight, announced May 15 in Kansas City, Mo., are:
“It’s definitely a field that’s growing and maturing here in the U.S.,” said Jack A. Litzenberg, Senior Program Officer for the Mott Foundation, which has supported the micro-enterprise industry for two decades through its Pathways Out of Poverty program.
Mott and the Citigroup Foundation each made a $250,000 grant to the Aspen Institute in Washington D.C. for the demonstration.
“It’s an important time to grow the industry,” said Elaine L. Edgcomb, director of Aspen’s micro-enterprise research project FIELD, the Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination.
“I think it’s important, because we’ve reached the stage where there are some very mature organizations that have the capacity and learning that can really take off. It’s important because of the market demand out there. It’s important because of the need for the field to demonstrate that it has the tools and the strategies that can really make a difference in the U.S.”
Aspen and AEO evaluated 37 proposals from micro-enterprise programs nationwide to select the eight for the demonstration.
As of 2006, each of the eight programs had made between 31 and 915 micro-loans valued at $486,000 to $6 million. They will work toward scaling up their operations, and also toward developing the technical and training expertise needed to help other micro-enterprise programs reach more clients.
“We hope to see a set of extremely strong organizations in charting a course for others to follow,” Edgcomb said.
Additional groups may participate in future years, depending on the funding.
About 500 micro-enterprise programs nationwide serve less than a million low-income entrepreneurs, but only nine have more than 600 clients.
Edgcomb said there are probably 10 million low-income micro-entrepreneurs nationwide, including women, people with disabilities, immigrants and ethnic minorities, but many are not affiliated with a micro-enterprise program.
Aspen and the AEO will evaluate the demonstration by measuring increases in scale and program quality as well as lessons learned.