FIELD Microenterprise Fund For Innovation, Effectiveness, Learning and Dissemination Microenterprise Development in the U.S. Joyce A. Klein Women’s Policy, Inc. Briefing December 2006 © The Aspen Institute

2 Market Size in the United States 21.5 million microenterprises, –responsible for 17.4% of all employment –10 million experience barriers to credit and business development services 22 million unbanked Large and growing informal economy, estimated at 10% GDP ©FIELD - The Aspen Institute

3 FIELD - The Aspen Institute Microenterprise DevelopmentMicrofinance Business Development Financing Microcredit IDAs Microgrants Microequity Retail Financial Services Consumer loans Savings/IDAs Check cashing EITC linked savings Alternative payday loan products Business Development Services Business Training/TA Access to Markets Financial Literacy Personal Effectiveness Bank Linkages

4 Key Facts About the US Microenterprise Industry > 500 service providers 175,000 – 250,000 served annually (as of 2002) $114.3 million in outstanding loans to 13,231 microentrepreneurs ©FIELD - The Aspen Institute Organizations: Stand alone; Human Service; Finance-led; Place-based community economic development

5 ©FIELD - The Aspen Institute Microenterprise Market  54% persons of color, ethnic minorities  Versus 14.6% of all US firms 60% at or below 80% HUD median 30% at or below 100% HHS  60% women  versus 33% of all self employed

6 Microenterprise market ©FIELD - The Aspen Institute Credit Scores: SBA microloan recipients: Other microenterprise lending: Broad range including no score

7 The Contribution of Microenterprises to Family Income and Well-Being  Household incomes go up over time, often by enough to move the family out of poverty.  Income growth among low-income participants is particularly strong.  Role of business in household depends on time spent in business (some are patchers), age of business.  While incomes go up, many still struggle to meet key needs and afford health insurance.  Supports family roles, personal development, and greater autonomy and control over the work environment. ©FIELD - The Aspen Institute

8  Business assets increase over time  Business net worth also grows  Personal assets increase  Changes in personal net worth less clear Microenterprise as an Asset-Building Strategy

9 Policy Supports for Microenterprise  Funding for microenterprise programs: SBA (Microloan, WBC, PRIME), CDFI Fund, CDBG, other  Supports for struggling families (health insurance, affordable housing, other asset-building programs)  Integrating microenterprise within the workforce system (TANF, UI, SSI) ©FIELD - The Aspen Institute

10 ©FIELD - The Aspen Institute For More Information