President Obama announces new loan initiatives to help small business
AEO says more capital is needed to meet rising demand for microloans
The Association for Enterprise Opportunity applauds President Obama’s decision to raise the maximum size of microloans from $35,000 to $50,000 as part of his new lending initiative to help small business. AEO, the national association for the US microenterprise development industry, made the recommendation to raise the loan limits of the SBA Microloan Program earlier this year.
“This is real and positive change and an important first step in modernizing the microloan program,” says Connie Evans, AEO’s president and CEO. “The next step will be to raise the amount of money microlenders can borrow to meet the increased demand for microloans,” says Evans.
The microloan program specifically targets aspiring and existing entrepreneurs who would otherwise face difficulty obtaining access to capital. Under the program, microlenders borrow money from the SBA to lend to disadvantaged entrepreneurs to start or grow small businesses. The program also provides microlenders funds to deliver business training and technical assistance increasing the likelihood of business success.
Currently microlenders can borrow up to $3.5 million from SBA to make loans to businesses in their communities. AEO made the recommendation last spring to raise that amount to $5 million. Today’s announcement makes the recommendation even more important. AEO members have seen a 48 percent increase in demand for microloans since May 2008 and over half of AEO members report that more capital for loans is a top need to meet that demand. “If the amount microlenders can borrow is not increased as recommended by AEO, our concern is they will be forced to make fewer loans,” says Evans.
AEO estimates that 10 to 20 million business owners face difficulty accessing business capital and could benefit from a microloan. “The small businesses the microloan program was created to help are crucial to our economy,” says Evans. “They create the jobs that will lift us out of the recession.” AEO estimates that small businesses working with microenterprise development organizations grow jobs in their communities at a rate of 2.3 per business year.
Please click here to see President Obama's announcement:
http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-on-Small-Business-Initiatives-in-Landover-MD/.
Association for Enterprise Opportunity
AEO is the national leadership organization and voice of microenterprise development. For nearly two decades, AEO and its hundreds of member organizations in the U.S. have helped more than two million entrepreneurs support themselves and their families and contribute to their communities through business ownership.
Contacts:
For Association for Enterprise Opportunity:
Sara Ignas, 828-693-6855
signas@microenterprisematters.org