By Li Miao Lovett A survey of 128 microlenders conducted by the Aspen Institute's Microenterprise Fund revealed that from 2008 to 2009, almost two-thirds said that loan applications had increased, but only 42% were able to step up their lending activity.
“But the bottom line,” program director Elaine Edgecomb explains, “is that many were able to respond to the challenge” – even as they and their microenterprise clients have felt the economic pinch. “Their value as an alternative source of capital has been demonstrated during this crisis. We need to find ways to strengthen this infrastructure so that it can meet the needs of even more small businesses.”
Discrimination against minority and small business owners in the Bay Area has been documented by the California Reinvestment Coalition. A 2007 report stated that “banks are failing lower-income communities and their business districts.” Only Citibank did a satisfactory job in six California counties surveyed, including Alameda and Santa Clara. Several banks received failing grades, with Bank America being the largest among them, for being inaccessible to small businesses in these communities.
“In general, you’re often going to find a reluctance to engage with traditional financial institutions, which could have to do with immigration status, language barriers, past experiences that have been humiliating, says Eric Weaver, CEO of Opportunity Fund, a leading U.S. microlender based in San Jose. Weaver got into microfinance in 1992, when the Clinton Administration began to enforce the Community Reinvestment Act, a 70’s-era law that encouraged banks to make loans in redlined communities. He saw the chance to reach out to small business owners who faced numerous obstacles.
Check out the full report at: http://calreinvest.org/system/assets/46.pdf
Posted by Li Miao Lovett on 09/20/10 “I put the cart before the horse,” says Julie Baumhofer, owner of Bu Tong Acupuncture. In 2009, she signed a lease for an office in the
By a stroke of luck, Baumhofer looked out the window one day and saw the awning of the Mission Economic Development Agency, which shepherded her toward obtaining that loan. The nonprofit serves mostly the working class and immigrants in the community in becoming entrepreneurs and homeowners. She didn’t fit the profile of MEDA’s clients, many of whom speak Spanish, but with good credentials and a community-based model for her business, Baumhofer she had no trouble obtaining a microloan from Opportunity Fund.
“You don’t have to be born rich and know the right people, and you can be a business owner,” says Baumhofer. “Thank goodness for
Canal Alliance has teamed up with Wells Fargo and local nonprofits in the Small Business Neighborhood Renovation Program. Design professionals and students will be polishing up storefronts for business owners in the Bay Area. It's another example of collaboration between the nonprofit and business sectors.
As I dig deeper into this story, it gets more complex than "big banks are the bad guys in this economic downturn." Opportunity Fund actually partners with banks to accomplish its lending objectives, but it's also getting capital from the federal government and private foundations.
The other groups involved in the renovation project are: Marin City Community Development Corporation, Small Business Development Center (SBDC), Women’s Initiative for Self Employment (WISE), and Philanthropy by Design.
Posted by Li Miao Lovett on 08/23/10
