About Micro Business

Micro enterprises or micro-businesses are everywhere in California – the organic tomato farmer at the Saturday market, the childcare center at work, the technology service firm who fixes your computer when it crashes, your favorite neighborhood restaurant, or the new sophisticated ice cream truck.

A micro-business is a firm with five or fewer employees, started for $50,000 or less in initial capital and that may not have access to traditional commercial loans. Micro Enterprises start small, but can grow quickly into large job-generating businesses. In fact, 85% of all businesses in the U.S. are micro! These very small firms generate close to 25% of all jobs in our economy.

Micro-business is a key job generating strategy.

  • 7.4 million Californians employed by small businesses in 2020.
  • 3.2 million microbusinesses have no employees.
  • The multiplier effect for a small local business on a local economy is twice that of a national chain.
  • The micro-businessperson is everywhere you are – the organic tomato farmer at the Saturday market, the childcare center at work, the technology service firm who fixes your computer when it crashes, your favorite neighborhood restaurant, or the new adult ice cream truck. Yes, those are local jobs.

Business technical assistance is the key to success.

  • Microentrepreneurs that have gone through training programs and receive technical assistance from CAMEO members have an 80% success rate (versus the 50-80% failure rate of small businesses that don’t seek help.)
  • Our members’ clients who start their own businesses also on average create two jobs in addition to their own, over a three-five year period.
  • For every $3,000 in technical assistance provided, a company generates $70,000 in sales.
  • The CAMEO cost of creating a job is the low average cost of $1,000 a job. That’s cheap when you consider a public works infrastructure project costs $50,000 a job.
  • If half of the 4 million micro-businesses in California hired one person, we’d create 2 million jobs and solve our unemployment problem.

Micro-businesses create jobs and generate income.

Annually our members serve about 21,000 businesses with training, business technical assistance and loans. These firms, which are largely start-ups, create or support 37,000 new jobs in California.

  • The businesses created a total of $1.5 billion in economic activity– raising state revenues, decreasing demand for government services and putting more money into local and state economies.
  • Federal taxes paid increased 35% over a five-year period.
  • We’ve seen $1 invested turn into a $30 Social Return on Investment (local multiplier effect, more tax revenue, less government assistance, etc.)
  • Traditionally, CAMEO members have served the emerging majority, the underserved – women, minorities and low income – or those who have high barriers to entry into the business world.
  • Because of the Great Recession, CAMEO members are serving new populations – struggling Main Street businesses and unemployed who have turned entrepreneurial and are the new free-agents.
  • An estimated 120,000 unemployed (about 5% of unemployed) are potential entrepreneurs.

Micro Enterprise development organizations provide comprehensive services to help entrepreneurs start and grow micro-businesses. These services include business planning, management training, market research, networking, business incubation, and loan packaging as well as financing of microloans. Many are non-profit and work for the best interests of their clients.

What is microlending?

Community organizations and lenders offer microloans to start-up and expanding very small businesses whose owners do not qualify for traditional bank financing. The loans, generally under $50,000, are used for either working capital or investment in fixed assets.

Many major banks are not offering business loans under $250,000 because the underwriting costs fora microloan is about the same as for a $500,000 loan, with a lower rate of return.

CAMEO’s network of microlenders are filling this financing gap for California’s smallest businesses.

CAMEO’s Role

CAMEO has 32 members who are California microlenders.

CAMEO’s multi-faceted approach to expand microlending in California includes:

  • Expanding available loan capital;
  • Training on financial statements and loan referrals;
  • Streamlining the underwriting process with web-based platforms;
  • Providing options for loan loss reserves; and
  • Advocating for state and federal microfinance and business assistance programs.

Through these efforts we hope to build the loan pipeline, increase quality referrals, and expand the number of loans made. In January 2014, we introduced a new program at the Forum — The MicroLending Academy.