Economy Taking Toll on Microlenders and Borrowers
Feb 15th, 2010 | By Dawn Rivers Baker | Category: EconomyWhen the financial markets collapsed and small business lending froze, one set of heroes of the day was the nation’s microlenders. In response, the American Recovery and Reinvestment Act included enough money to support $50 million in microloans, an unprecedented infusion of funding for the federal government. Unfortunately, microfinance organizations recently seem to be facing their own troubled asset challenge and nobody from the federal government is standing by with hundreds of billions in taxpayer funded bailout money.
The problem is pretty simple and very easy to understand. Point number one: the economy stinks. Point number two: microenterprise development organizations often provide business management education to their clients prior to writing their microloan but they are not always successful at getting those clients to come back in for the technical assistance that comes after the microloan. Without the help, a lot of microfinance clients are in danger of defaulting on their loans, which puts the microlenders at risk. Neither the Association for Enterprise Opportunity (the microenterprise development industry trade organization) nor the SBA are offering either support or guidance right now, for perfectly valid reasons that have perfectly terrible timing. So, is anybody poised to come to the rescue with a microTARP program of some sort in the immediate future? What do you think?
