I Am Beautiful: A Celebration of Women in Their Own Words

Public Policy BreakthroughIn the U.S. microlending began in the early 1970s. ACCIONInternational, which has run micro-enterprise programs inLatin America since 1973, set up shop here in 1991 after recognizingthe widening gap between haves and have-notsin the United States. By 1994, microlending vaulted to newlevels, when leaders at the World Bank realized that afternearly 50 years of trying to spur economic development inless developed nations, the rich were still getting richerwhile the poor languished. The bank's top honchos had anepiphany: put tiny amounts of capital into the hands of entrepreneursand you build countries. Joined by 23 other developmentbanks, the World Bank pledged $27 million ofthe $200 million total to microlenders through the ConsultativeGroup to Assist the Poorest (CGAP), expecting toreach 7.5 million women and their 38 million family membersin ten years.Piqued by the World Bank initiative and the success ofinternational microloan programs, U.S. Treasury SecretaryRobert Rubin successfully lobbied Congress and PresidentClinton, and in 1994 helped create the Community DevelopmentFinancial Institutions Fund (CDFI) to expand theavailability of credit, investment capital, financial and developmentservices in poor urban and rural communities.He then appointed Kirsten Moy, an expert in mortgagelending in poor areas, as CDFI's first executive director. Toimplement the CDFI politicians, following in the footstepsof international microlenders, deferred to private agenciesexperienced in micro-enterprise. CGAP would leverage the$200 million in funds allocated—enough to reach nearly 40million borrowers.The need is there. In 1995, CDFI received 268 applicationsrequesting more than $300 million in financial assistancewhich is a 10-1 subscription above the $31 millionavailable.Janie Barrera, Executive Director of ACCION-San Antonioand a daughter of micro-entrepreneurs, has demonstratedthe correctness of those decisions. Barrera's parentsscrimped and saved to open a Mexican restaurant in CorpusChristi, where she waited tables. After a stint in the AirForce, her entrepreneurial instincts and her desire to returnto her community to "make a difference," led her toBoston-based ACCION International. With ACCION seedcapital she set up an office, then went banging on doorsuntil she got four banks to extend $150,000 worth of interestfree credit. She cadged an additional $150,000 fromPartners for the Common Good Loan Funding, a religiousEqual parts banker, social worker,cheerleader, den mother, andMafld bagman, successful microlenders dothings that few traditional financiers do.organization dedicated to socially conscious lending.Crisscrossing the sprawling city, she now ferrets out theconventional banker's nightmare clients—women, mostlyLatinas, with bad or no credit. Often she finds them as foodvendors at street fiestas that move from neighborhood toneighborhood. Some work from store fronts; perhaps a curtainand drape retailer who could land a major contractwith the school district, if only she had credit to purchasematerial.Barrera and her staff find these entrepreneurial womenthrough word-of-mouth, public service announcements(PSAs), newspaper ads, socials, and tenant meetings. Withloans averaging $2691, ACCION-San Antonio has disperseda total of $1.5 million in loans; they had one defaultthis year. ("If only she had come to us for help," moans Barrera).Barrera's goal for ACCION-San Antonio and herclients is economic self-sufficiency. She has funds to make350 loans a year but expects to come up short. It's not easyto find borrowers among those alienated by the bankingsystem, and convincing them one-on-one that they deserveaccess to credit and capital. Since the lender goes out on alimb (Barrera once accepted a day care center's couch ascollateral), she must have monthly payments on the loan'sdue date. Poor judgment about a client's credit worthinessand lax repayment collection would quickly doom a microlender.Barrera recalls a husband-wife team who sold icecream from a truck for 15 years, saving every penny to buya dilapidated grocery store. A small loan transformed it intoa thriving taqueria; two subsequent loans enabled them tobuild a drive-through window. Rapid growth sometimescreated cash flow problems. Barrera feared that they wouldstart skipping loan payments. Her fears seemed real on thelast day for an on-time payment, until the borrower arrivedat ACCION's office, soaking wet after taking buses througha rainstorm to deliver her loan payment.An Antidote to Welfare?Connie Evans, executive director of the Women's Self-EmpowermentProject in Chicago, tries to strike a balance betweenmicrolending and support services for her agency'sclients, 35% of whom are on welfare, 80% whom are black,all with family incomes below $15,000. Having visitedGrameen Bank in Bangladesh, Evans has modified microfinanceto work in an inner city. She's flexible about solidaritygroups, forming them only when a simpatico group coalesces.She also spends time helping women negotiatesocial services, puts five percent of loan proceeds into ansavings account for clients' emergencies, and offers somebusiness and technical support: "This is not Bangladeshwhere you can buy a cow and sell the milk. A woman fromthe South Side might be sewing garments from home, butshe's competing with Wal-Mart and J.C. Penney. We've gotto step up with technical assistance and increasedloan size."Other municipal programs contract with privateagencies with close ties to their needyclients. Ithaca Urban Renewal Agency of Ithaca,N. Y, for example, chose Angela Noble Presidentof the Noble Economic DevelopmentGroup to design and deliver local microenterpriseprograms. Noble's typical clients are poor women ofcolor, such as a landscaper who came to the loan-reviewcommittee with two-foot long garden shears in hand. "Wedidn't turn her down," notes Noble.Flexibility and fine-tuning are the keys to successful mi-Spring 1997