Microenterprise in the Heartland: Self-Employment as a Self-Sufficiency Strategy for TANF Recipients in Iowa, 1993-1998

The article reviews an evaluation of promoting microenterprise development as a welfare-to-work strategy for Temporary Assistance for Needy Families (TANF) recipients. It examines the first five years of the programme, run by Iowa's Institute for Social and Economic Development's (ISED). It outlines the programme components as:

• Formal microenterprise development training - comprising orientation, business feasibility and personal readiness;
• Business plan development training and technical assistance;
• Access to business funding - comprising microloans from commercial banks with priority for those completing the ISED programme, credit enhancement through partial loan guarantees, Iowa small business loan programs, the self-employment loan programme, targeted small business financial assistance programme and private grants;
• Follow-up assistance - comprising post-start technical assistance and community support systems.

The article assessed programme impacts from ISED data which showed that between July 1993 and June 1998:

• About 1946 people completed orientation, 972 progressed to enrollment, 472 completed training and 234 of them achieved business starts or expansions;
• Of the 225 businesses started or expanded by these participants, 11% were minority owned, 76% were female owned;
• Around 88% were new starts, 60% were in-home businesses;
• Up to 57% were service businesses compared to 30% retail and 5% manufacturing;
• There was a net increase of employment of 29 full-time and 53 part-time employees;
• The businesses received USD 855,927 in loans or grants with 34% from commercial loans, 26% from the state and 14% from private sources.

The article concludes that the evaluation of the ISED Entrepreneurial Training Program indicates that microenterprise development works for a small but significant percentage of welfare recipients as a strategy for self sufficiency. The self-employment strategy requires greater initial investment of time but the long term payoff in terms of rates of exiting and employment generation demonstrate its success.