Credit-led Microenterprise Lending Strategies: Survey Results

October 01, 1997

Who are Microentrepreneurs?

  • 62 percent are from a minority ethnic or racial group
  • 78 percent are women
  • 83 percent are high school graduates
  • 34 percent have employees
  • 78 percent of their businesses have lasted at least 2 years

Attributes of Credit-Led (individual) Loan Programs from 328 programs surveyed by the Aspen Institute

  • Average loans per program was 29
  • Average loan size was $9,248
  • Maximum loan size ranged from $1,000 to $500,000
  • 40 percent of the programs made loans up to a maximum of $20,000
  • 28 percent made loans up to a maximum of %5,000
  • 36 lenders allow a maximum term of six years of longer

The Aspen Institute survey found 152 respondents who tried to get a business loan from a financial institution other than a microenterprise program. Of these:

  • 47 percent received credit (71 people)
  • 53 percent were denied credit (81 people)

The majority of respondents who were denied credit reported the following reasons for denial:

  • business was too small or young
  • lack of collateral
  • inadequate or problem credit history

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Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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