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Washington, D.C.—Today, Rep. Andy Kim (D-NJ), Chair of the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access, convened a panel of entrepreneurs, lenders and experts to hear their perspectives and experiences with the Small Business Administration’s (SBA) Microloan program.

“As head of the Subcommittee focused on expanding access to capital, today was an opportunity to probe one of SBA’s most exciting initiatives—microloans,” said Rep. Kim. “The Microloan program provides a unique opportunity for entrepreneurs to access both financing and technical assistance, side-by-side. Last year, in my home state of New Jersey, 150 microloans totaling approximately 2.5 million dollars were approved.”

Congress created the Microloan program in 1991, which makes funds available to nonprofit, community-based lenders who in turn make very small loans to eligible borrowers—many of whose businesses serve their local communities. Specifically, the program provides direct loans to qualified nonprofit intermediary lenders who, in turn, provide loans of up to $50,000. The program also offers marketing, management, and technical assistance to borrowers and targets early-stage businesses in underserved markets, including borrowers with little to no credit history. Last year, women business owners received about 47 percent of microloans, while minority borrowers received over 48 percent.

Many of the issues discussed in today’s hearing stem from the fact that SBA’s microloan initiative started as a pilot program. Lawmakers today vowed to work alongside impacted small businesses and lenders to modernize the program, ensuring the programs’ goals of providing both microbusiness financing and technical assistance are best achieved.

“Since Colorado Enterprise Fund began in 1976, we have made more than $81 million in loans to start and grow over 2,400 small businesses in Colorado and have created or maintained over 12,000 jobs,” said Ceyl Prinster, President and CEO Colorado Enterprise Fund, a Community Development Financial Institution (CDFI) and SBA Microloan Intermediary. “These loans helped entrepreneurs who could not obtain the capital they needed from traditional sources like banks. A significant percentage (85%) of our loans have been made to minority, women, veteran or low-income entrepreneurs. CEF’s current portfolio consists of 614 loans totaling $24.6 million outstanding. Our small business loan repayment rate averages over 97%.” 

“Congressional investment in micro-business development matters: 88% of small businesses that receive business development services are still in business after five years,” said Carolina Martinez, CEO of the California Association for Micro Enterprise Opportunity, California’s statewide micro-business network. “This compares to an overall five-year business success rate of less than 50 percent. Businesses that receive training tend to have average annual revenues that are 38 percent higher than those that do not. Business ownership is also a means to increase income and generate wealth. In underserved communities – whether urban or rural – microbusinesses are creating jobs and uplifting their communities.”

“After Mariama’s Beauty Supply had been in business for two years, CEI loaned me funds using the Small Business Administration (SBA) Microloan program,” said Mariama Jallow, Owner of Mariama’s Beauty Supply in Portland Maine and a Microloan recipient. “This allowed me to increase my retail stock and to renovate my store to include a full-service salon, which will employ a hair stylist and makeup artist, in addition to the existing hair braiders.”

“Great Lakes WBC is an example of how organizations, in partnership with the SBA, can serve the needs of entrepreneurs in their communities – turning them into job creators – through the Microloan Program,” said Michelle Richards, Executive Director of the Great Lakes Women’s Business Council. “Centers like mine work tirelessly to provide entrepreneurs throughout the country with the resources they need, be it technical assistance or a loan. Our center focuses on assisting women, especially those who are economically or socially disadvantaged. A critical part of their success is access to capital provided through the SBA Microloan program.”

“I look forward to working with my colleagues on both sides of the aisle to use the feedback we gathered today to strengthen and modernize the Microloan program,” said Rep. Kim. “In doing so, we can help entrepreneurs with great ideas connect with the financing and support they need to grow and create jobs in our communities in New Jersey’s 3^rd District and across the country.” 

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