Sources of Public Funding for Microenterprise Development in the United States

This issue of the Microenterprise Development Fact Sheet Series outlines Federal and State funding sources for microenterprise development (MED).

It identifies the following major sources of federal funding:

• Demonstration Partnership Program: aims to stimulate the development of new approaches to provide self-sufficiency for the poor;
• Job Opportunities for low-income individuals Project: aims to create employment and business opportunities for low-income individuals;
• Small Business Administration (SBA) Microloan Program: combines grants and loans to non-profit agencies for technical assistance and loans to entrepreneurs;
• SBA Program for Investments in Microentrepreneurs (PRIME) program: provides grants to community-based MED organizations to offer training and technical assistance to low- and very low-income entrepreneurs;
• SBA Womens Centers: provide training and technical assistance to women who are starting or expanding their business;
• Community Development Financial Institutions (CDFI) fund: awards grants, loans, equity investments, deposits and share capital to non-profit credit unions, development banks, venture capital funds and loan funds.

The paper states that:

• MED programs often patch together funding from six to eight different sources;
• To leverage additional dollars and staff, MED programs are increasing partnerships with traditional economic development organizations, corporations and banks.

The paper then discusses regional and state level funding, as well as welfare reforms. It concludes that:

• Public funding for MED remains the primary source of funding for most microenterprise organizations;
• An average microenterprise organization exhibits a healthy mix of funding sources and this has led to greater stability and self-sufficiency.