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Introduction to Microenterprise. Telework Forum Follow-up July 14, 2009. What is Microenterprise Development (MDO)?. A strategy to create jobs, alleviate poverty, support community development, and empower low income individuals (AEO). Very small business
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Introduction to Microenterprise Telework Forum Follow-up July 14, 2009
What is Microenterprise Development (MDO)? • A strategy to create jobs, alleviate poverty, support community development, and empower low income individuals (AEO). • Very small business • Entrepreneurs with no access to traditional credit • Business education and capital • Very small loans • Goals of poverty reduction community development and job creation
Microenterprise’s Beginning • Dr. Muhammad Yunus • Grameen Bank begun in 1970 • 40 loans, $27 dollars • Awarded 2006 Nobel Peace Prize • Grameen-related organizations now in 40 countries
Microenterprise in the US • Beginnings in 1980s • Start or expand very small business • <$35,000 in starting capital fewer than 5 employees • Varied organizational structure • Credit versus Training-Led • Independent agencies, or subsidiaries (often to CDFIs, CDCs, etc) • Range of services • Credit products • Education
Typical Microenterprises • Retailers • craft shops, florists, used clothing stores • Service suppliers • hairdressers, caterers, graphic design • Manufacturers • carpenters, craft artisans, bakers
More Than Loans • Goals of creating economic security, development and job creation. • Improving access to credit (raising scores) • Ex. Credit builder loans • Personal finance and business training
Typical Microentrepreneurs • Working poor • People caring for families • People with disabilities • Public assistance recipients • Immigrants and refugees • Recently unemployed Source: Elizabeth Wilson, AEO
Client Demographics • 78 % women • 42% African American • 81% with no college degree • 47% with business sales under $1,000 per month • Median income of $26,227 for poor and non-poor clients Source: Elizabeth Wilson, AEO
Who Provides MED Services? • Microenterprise development agencies • Traditional business development agencies • Community economic development organizations • Employment & training organizations • Human services and faith based agencies • Target group focused organizations Source: Elizabeth Wilson, AEO
Microenterprise Players • Association for Enterprise Opportunity (AEO) • State Microenterprise Associations • Program start-up • Monitoring, and evaluation • Training • Peer lending opportunities
Microenterprise Funding Source: Elizabeth Wilson, AEO
Where is the funding? • Federal sources include: • SBA • MicroLoan • PRIME • Women’s Business Ownership • Community Services • JOLI • CFDI Fund at Treasury • CDBG Funds • USDA • Intermediary Relending • Rural Business Enterprise • Rural Community Development Init. • HHS • ORR
Microenterprise Successes • 49 percent Five year survival rate - comparable to the average for similar businesses • 53 percent of poor entrepreneurs move out of poverty. Most doubled income over 5 years • Estimated for every $1 invested in MED returns $2.5 (income for owners & employees, asset growth, reduction in public assistance, unemployment insurance costs, increased tax revenues Source: Elizabeth Wilson, AEO