Microenterprise Support Within Community Development Financial Institutions
With an aim to gain insights into microenterprise funding in the United States, this paper describes the scale and significance of microenterprise lending within the CDFI (financial intermediaries that focus on community development) industry, based on data collected under the national CDP (CDFI Data Project).
The paper compares CDP data to MicroTest and the US FIELD report (two other data sources). It reports the analysis of the data on:
- Scale of lending activities;
- Significance of microenterprise activities to these CDFIs;
- Institutional types;
- CDFIs with a focus on microenterprise;
- Significance to the microenterprise sector;
- MicroTest institutions;
- Types of financing and their targeting.
The paper lists the following key findings:
- Microenterprise lending is a small portion of the CDFI industry activity.
- Of the total portfolio, 2.3% in terms of numbers and 1.1% in terms of value were micro-enterprise loans;
- Microenterprise lending is predominantly done by specialist organizations structured as non-profit loan funds.
The paper concludes that the most significant microenterprise lenders provide loans as a dedicated service to micro entrepreneurs. Some credit unions also provide a significant level of microenterprise funding, while maintaining a strategy of portfolio diversification.
