Microfinance

Small business startups in the U.S. are typically funded through owner savings, credit cards, family or friends. Bank loans are out of the question, and most Angel Investors are not interested in funding “concepts.” Of course, rarely does a small startup qualify for venture capital funding.

Small startups that cannot self-fund their business are out of luck—unless they can qualify for a “microloan.” The concept of microfinance has been around for some time…Kiva, Grameen, ACCION® International, “community” funding, and the Small Business Administration…are only a few of the organizations providing microfinancing for small businesses.

Microfinancing has grown in recent years, not just because it is a great help to poorer entrepreneurs, but because it is good business. For instance, in the last decade, ACCION partners have disbursed more than 28.5 million loans, totaling $23.4 Billion, to men and women entrepreneurs in 23 countries. The repayment rate of these loans stands at 97 percent—a far cry from the recent performance of Wall Street.

Now, more main-stream sources of funding are joining the microfinacing arena. I have previously posted about Super Angels, Community Development Venture Capitalists (CDVC’s), Open Source Funding,  and the shift by Venture Capitalists  to earlier stage funding. All of these sources are looking at startups, and many of them are offering microfinancing.

Of even greater significance is the interest being shown in microfinance by mainstream investors. Here is just one indication: ACCION® International—the private non-profit pioneer in microfinance—is sponsoring a conference in Washington D.C., September 21-23; to “…analyze next-generation microfinance investments for pension funds, family funds, and private wealth managers.” “…the conference will also assess the latest venture capital, or ‘frontier,’ investment initiatives in industries supporting microfinance.” Perhaps institutional investors are beginning to look beyond Wall Street for their investments

Could microfinance be for you?

If you are an entrepreneur wanting to start a small business—and you have no money, microfinace may be something to consider. The SBA Microloan program is a good place to start. Look at several other avenues for microfinance by searching the Internet for Microloans—there are many sources available.

Good luck!

2 thoughts on “Microfinance”

  1. Great useful information for entrepreneurs here, Bob. Thank you. I like the connection here to the average entrepreneur here and not merely in developing countries. But speaking of developing, it is so needed in inner cities throughout our country, where there is already a natural greening, where row after row of houses once stood. Perhaps with such loans gardening can occur and those who are unable to get to Walmart to shop can do so instead of shopping at the local liquor store that only carry vegetables cans of salty water and bologna and super size boxes of candy and chips. We then wonder why we have obesity related health problems, including diabetes and hypertension. Maybe microfinancing can help entrepreneurs who want to grow healthy foods and not depend on Walmart and, of course, Whole Foods is out of the question. Thanks for the post, Bob.
    .-= Judith Ellis´s last blog ..Being Marvin Gaye =-.

  2. Judith – There are many opportunities for new entrepreneurs, but it is difficult for many people to take that first step toward entrepreneurship. My goal is to try and convince people, who are afraid to take that leap, that they can do it. With a strong desire, a little business training, and lots of help from their friends and colleagues, they can become any kind of business person they want. That’s my belief anyway.

    Community gardens are very big in many parts of the country–it just takes a lot of organization. It seems like grants for this kind of thing should be readily obtainable. I want to look into grants some, in the near future, and I will keep my eyes and ears open regarding the availability of grants for community gardens and green entrepreneurship—especially inner-city green entrepreneurship.

    Thanks again Judith.
    .-= Bob Foster´s last blog ..Microfinance =-.

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