TO OUR CREDIT, Part Two:
Bootstrap Banking in America

Despite recent success on Wall Street, our economy has serious weaknesses. Large employers continue to downsize; low wages mean growing numbers of working poor; the income gap between rich and poor is growing larger.


As TO OUR CREDIT makes clear, self-employment, or microenterprise, has become the best or only path to economic opportunity for many low-income Americans. But, as the saying goes, "it takes money to make money". These fledgling businesses need loans and other kinds of support to succeed.


TO OUR CREDIT tells several stories, including that of Cheryl Taylor, a single mother of four in Wolfeboro, New Hampshire. She started a clothing consignment shop as a way to support herself and her children. She needed $1000 to pay the rent and acquire inventory, but she couldn't get a loan. Her credit record was tainted by her ex-husband's, and her need was too small to be profitable for a bank.

In general, banks and other financial institutions are simply unable to meet these needs. Hundreds of economic development organizations have responded by providing help to people like Cheryl, including small loans for self-employment, business training, networking and access to markets. The Association for Enterprise Opportunity is spearheading a national effort to assist one million low-income Americans to achieve economic self-sufficiency through self-employment by 2008.

Microenterprise is an especially important option to women, who often face the two-fold task of being a parent and earning a living. In the United States, three out of every four microentrepreneurs are women.


Research indicates that assisting the self-employed is a valuable and cost-effective strategy. Among the facts which have emerged about microenterprise development are the results of a recent study, conducted by the Aspen Institute, of several hundred microentrepreneurs in seven programs across the United States. 25 percent climbed out of poverty in three years; almost half had significant increases in their business and personal assets. In addition, the Institute estimates that the cost of creating jobs through microenterprise ranges from $2,000 to $9,000, considerably less than most other strategies.


Microenterprise development is a departure from conventional economic development strategies in the way it extends freedom to use the loan while demanding on responsibility in paying it back. It avoids the draining of dignity and confidence that is often a by-product of charity or welfare.

For linkages to more information about microcredit, please select the resources option.
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