Micro-Lending
How President Obama could finance your bliss
2009-04-20
By Terry Glover
Two stories surfaced over the weekend, which converge, coincidently with our current dual crisis of confidence and cash. While the White House was issuing an announcement about President Obama’s institution of microfinancing initiatives, The New York Times ran a story on seeing/seizing the current workforce upheaval as an opportunity to follow your bliss. And while “bliss” might seem like the remotest of possibilities right now, the wisdom of one follows the practicality of the other.
Included amongst a slew of Western Hemisphere initiatives unveiled on Saturday at the Fifth Summit of The Americas in Trinidad and Tobago, the President announced a $100 million growth fund partnership between the Inter-American Development Bank (IDB), the U.S. Overseas Private Investment Corporation (OPIC) and the Inter-American Investment Corporation (IIC). The purpose of the partnership is to launch a fund that will help “rebuild the capacity of microfinance institutions to continue to lend to micro and small businesses as recovery takes hold.”
Historically, microlending has only been actualized in a significant way in developing countries, the most well known being India’s Grameen Bank, whose founder, Bangladeshi economics professor Muhammad Yunus was awarded a Nobel Prize in 2006 for his efforts. Grameen was instrumental in making it possible for dozens of cottage businesses to flourish well enough to lift entire villages out of poverty. But data as recent as Fall 2008 indicate similar movement in the United States as microlending institutions like ACCION USA reported an uptick in applicants. The loans are small – between $5,000 and 50,000, but have made funds available to borrowers whose lower income, poor credit or lack of collateral make them ineligible for traditional bank loans. ACCION indicates not only an increase in the number of applications submitted, but a shift in the kind of borrower seeking financing as applicants with good FICO scores (between 650 and 750), unable to secure traditional financing from skittish banks, have started popping up on their radar.
What this suggests is a reaction to the rising unemployment levels, as displaced workers from the bottom rung on up the ladder look for ways to replace lost income and make themselves less vulnerable to shifting employment forces at the same time. You can’t be downsized, the reasoning goes, if you’re self-employed. And, as pointed out in The New York Times article, “Is This The Time To Follow Your Bliss? more frequently, the instinct for self-preservation is leading to self-actualization as folks find the “what if” morphing into “what next.” Here, business coach and Preoccupations column contributor Pamela Slim suggests there is no time like the present to really entertain the notion of reinventing a career. “If you have to live with uncertainty,” Slim writes, “you may as well pursue what you care about deeply.” Her examples range from starting a church to opening a yoga studio, but could just as easily be a neighborhood spot for cheap coffee and donuts (franchise, anyone?) to a small shop purveying locally grown produce. Economies of scale certainly factor in, but the notion of downsizing is taking hold in more sectors than just the work force, making the idea of a sustainable small (micro?) business more plausible with each market downturn.
When the economic façade began to crumble towards the end of the presidential campaign, candidate Obama spoke of America’s future being in the hands of small business owners, creators of some 70% of American jobs. His pledge to create a national network of public-private small business incubators and invest $250 million annually to establish such centers in disadvantaged communities received high approval ratings. If the president’s initiatives deliver on that promise and his new partnerships are inclusive of microfinance efforts here at home, the results could be phenomenal.
America’s shifting financial fortunes have made enough people consider taking a chance on themselves in pursuit of what may have been, up until now, a pipe dream. The only question remaining: What’s a down payment on bliss going for these days?
Terry Glover is Senior Editor for EbonyJet.com. She writes about trends and culture, popular and otherwise.
