The Boston Globe
By: Gina Harman and Jim Koch
February 1, 2010
`JOBS MUST be our number one focus in 2010,'' President Obama said last week in his State of the Union address.
``We should start where most new jobs do - in small businesses, companies that begin when an entrepreneur takes a chance on a dream, or a worker decides its time she became her own boss.''
We couldn't agree more.
After a year of major efforts to jumpstart the economy, unemployment remains stubbornly high. Its effects gnaw at every American's well-being, employed or not.
Obama is right; government actions and policies do play a powerful role in rebuilding and strengthening America's job market. Since 1953, for example, the US Small Business Administration has been providing loans and many other forms of assistance to countless businesses employing 500 or fewer workers.
But many individuals - microentrepreneurs - struggling to start and sustain small businesses don't qualify for these government programs.
There are more than 22 million self-employed microentrepreneurs in the United States - owners of small businesses with five or fewer employees.
These small business owners share the ``stubborn resilience'' and hard work ethic that, according to Obama, characterize the American people. The fruit of their labor is income and employment for themselves, their families, and others in their communities. They are the personification of Main Street USA, and the essence of our free-enterprise economy. And they will be a major factor - perhaps the major factor - in pulling America out of the Great Recession.
Microentrepreneurs often share another common obstacle - difficulty in finding and qualifying for affordable business loans. Access to adequate financing is the single most critical need for anyone seeking to launch or maintain a small business. Public and private sector efforts to increase the flow of loans to businesses of all sizes have been of some help, but not nearly enough to restart the small business job engine.
Simply put, small entrepreneurs need additional sources for loans.
Microfinance, perhaps best known as a means of helping small business owners in developing countries move out of poverty, is one source already in place in the United States. These organizations make small loans and other financial services available to low- and moderate-income businesses. Support for microfinance programs, perhaps through a portion of the $30 billion pledged for community banking institutions, equals support for small businesses and through them, the communities in which their owners live and work.
One major provider of microloans is ACCION USA, the domestic arm of Boston-based ACCION International, a global microfinance nonprofit. Since 1991, ACCION USA has provided more than 18,500 microloans totaling more than $119 million to microentrepreneurs who could not get other forms of credit.
Each such loan that ACCION USA provides averages $8,000 and contributes to the creation or retention of 2.4 jobs in low- to moderate-income communities. That works out to roughly $3,300 for each job created - extremely efficient when compared to the cost of other job creation strategies.
Moreover, microloan recipients provide wages to their employees that are 25 percent higher than the national minimum wage. Over 90 percent of these borrowers repay their loans on time, enabling that money to be re-loaned to other small business owners.
Access to capital is not the only requirement for success on the part of many aspiring small business operations. Microentrepreneurs often lack formal business training and access to experienced mentors and the networking resources that help make their more advantaged counterparts succeed. Microfinance organizations provide crucial assistance in these matters.
There are useful ways to participate in the microfinance effort.
We can encourage government support for domestic microloan programs.
Companies of all sizes can include nonprofit microfinance organizations in their philanthropic efforts.
Individuals can find ways, including through microfinance organizations, to volunteer their expertise to small business owners.
And we can patronize small businesses.
Microfinance is an inexpensive and effective method of job creation. By helping small businesses prosper and develop, microfinance helps our communities, our economy, and our nation.
Gina Harman is president and CEO of ACCION USA. Jim Koch is founder of The Boston Beer Company. The two organizations partner on Samuel Adams Brewing the American Dream, a philanthropy initiative to support microentrepreneurs in the food and beverage industry.