In connection with the study, Aspen Institute’s FIELD program (Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination) is making grants to five nonprofit microenterprise organizations that will provide financial coaching and education, along with access to a secured credit card, to microentrepreneurs whose credit profiles need strengthening to qualify for business financing. The Aspen Institute will also provide training, technical assistance, and a series of ongoing peer learning activities to support the pilot. A thorough evaluation and assessment of the program will determine if the approach is effective and scalable.
Two of the five nonprofits are CAMEO members!
Mission Economic Development Agency (MEDA): San Francisco-based MEDA has worked to assist low-to-moderate income Latino families for build assets since its inception in 1973. MEDA’s Business Development Program provides comprehensive technical assistance and training services and incorporates financial education with a focus on savings, debt and credit. In 2010, MEDA developed a targeted financial education and credit coaching program that will support its efforts to offer secured cards to its customers.
Pacific Asian Consortium in Employment (PACE): with a long-standing history serving Pacific Asian and other diverse communities in Los Angeles county, the Business Development Center at PACE was founded in 1994. PACE’s Financial Education and Asset Building Program (FE/AB) has provided a wide variety of training and individual counseling targeted at building credit since 2003.
Other organizations include: Champlain Valley Office of Economic Opportunity Inc. (CVOEO) and Central Vermont Community Action; Latino Economic Development Corporation (LEDC); and Women’s Brooklyn Enterprise Center (WBEC). The initiative is based on a successful program led by Justine PETERSEN, a St. Louis-based microlender that has been offering secured cards to its microenterprise clients for almost two years.
In today’s economy, a good credit score is an important financial asset that allows small business owners to access resources and, in many instances, reduce operating costs. Over the past two years, high U.S. unemployment levels have led to an increase in the number of credit applications from individuals who are motivated to start their own businesses but whose damaged or thin credit histories make it challenging for even community-based nonprofit microlenders to provide loans. Research has shown that the best way to expand financial capability and build (or rebuild) an individual’s credit score is to pair appropriate financial products with education and counseling.