Microfinance Makes Itself Felt Through Crisis
Jan 18th, 2010 | By Dawn R. Rivers | Category: ResearchOne of the most stark differences between the outgoing Bush Administration and the incoming Obama Administration was undoubtedly their respective policies toward domestic microfinance. After spending several years trying to get rid of the SBA’s Microloan program by zeroing out its funding, Bush finally resigned himself to the inevitable but continued to look for something he could offer to lawmakers to replace it. The Obama Administration, on the other hand, played their cards very differently as soon as possible by using the American Recovery and Reinvestment Act to inject an unprecedented $31 million into the program. As of last week, the SBA had provided its Microloan Intermediaries with $28.3 million of that $51 million in loans.
Meanwhile, the microenterprise development industry has been measuring outcomes for almost a decade now through its MicroTest initiative, launched in 2001 in cooperation with the Aspen Institute’s Microenterprise FIELD project. Last week, ACCION USA, the nation’s largest microlender, released data from the past two years of its participation in the MicroTest study to demonstrate the effectiveness of microenterprise development during the current massive recession. ACCION’s numbers show their client business survival rate was 98% (89% of new business starts). In addition (since jobs seems to be on everybody’s mind these days), the report also notes that each ACCION client created or retained 2.4 jobs on average with a median wage that is 24% higher than federal hourly minimum wage.
