During a recent visit to Michelin, their CEO was proud to share an initiative where Michelin had allocated $2 million for lending to local small businesses in light of the economic crisis. Its success got me thinking, “Why hasn’t the domestic micro-finance model moved to the forefront of options for small businesses today?”
There are only a handful of organizations that make more than 100 loans a year, including ACCION USA, Kiva, and Opportunity Fund. While domestic micro-enterprise development has been around since the 1980s, the industry got a boost two years ago when Grameen America opened in Harlem and Brooklyn, and then a Manhattan branch in May 2010.
It is clear that the current efforts are not competing with the role of banks, but imagine if in each city there was a geographically relevant micro-finance collaborative that invites the largest revenue and profitability corporations to pool funds for lending to small businesses in their immediate surrounding area. Imagine local government and local banks also joining the collaborative.
There is no question that our local governments and banks are currently challenged while the largest corporations sit with some of the most cash reserves in history. Why don’t they put some of that money to work for the communities they depend on for workers, customers, and goodwill?
Employing a lens of “Uncommon Sense,” here are five tips I believe could help transform our domestic micro-finance system: