As credit tightens up and business conditions worsen in what has now been officially declared as a recession, small businesses that rely on funding are the first to suffer.
Responding to the sharp economic downturn facing the nation, a group of seven leading nonprofits that offer lending and support services to small businesses are taking swift actions to help entrepreneurs challenged by higher costs, declining sales, and tightening credit.
Leaders of the seven organizations came together last month in Albuquerque, NM, to share their approaches, including: customizing their counseling and coaching services to help businesses adapt to the economic downturn, implementing new technology and reconfiguring staff to increase loan production, and developing new loan products and financial counseling services for credit-challenged customers.
Microenterprise Development Organizations Work With Very Small Businesses
Known as “microenterprise development organizations” because of their work with very small businesses started with $35,000 or less in capital and employing five or fewer employees, these organizations are part of a select group of leaders that has been meeting together for two years to find ways to reach more clients and achieve greater impact. The seven are: ACCION New Mexico, Albuquerque, NM; ACCION USA, New York, NY; ACEnet, Athens, OH; Justine Petersen, St. Louis, MO.; Mountain BizWorks, Asheville, NC; Opportunity Fund, San Jose, CA.; and WESST Corp, Albuquerque, NM.
Their work together is coordinated by the Aspen Institute and the Association for Enterprise Opportunity, the national trade association for U.S. microenterprise programs. Funding is provided by the Charles Stewart Mott and the Citi foundations.
The Aspen Institute’s Elaine Edgcomb, who has been overseeing and guiding the group’s activities, said
“they were selected because they are among the largest and most effective of the nation’s cadre of some 500 nonprofit microenterprise programs. The very small businesses that they serve are the bedrock of our economy. In the face of ever more disheartening reports from the nation’s mainstream financial institutions, it is important that leaders like these are working creatively and collaboratively to keep these businesses moving and our economy going.”
Business Assistance Strategies
In 2007, the seven groups served 5,302 clients and made 1,728 loans totaling just under $13 million, with a loan loss rate of 3%.
Other business-assistance strategies the organizations are using include:
- Creating new distance-learning tools and products to better reach entrepreneurs in rural areas
- Helping clients develop and implement new marketing strategies to stabilize sales
- Developing incubation facilities to provide affordable space and business services to entrepreneurs
- Expanding services across states to serve more entrepreneurs.
The Institute’s microenterprise program, known as FIELD (Fund for Innovation, Effectiveness, Learning and Dissemination), is a research and development program that works to expand and improve microenterprise programs in the United States. For more information about FIELD, visit www.fieldus.org.
Image Credit: Stanford Business Review