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It seems hardly a moment goes by these days without mention of some kind of financial product. At the same time as we read about debt statistics described in apocalyptic terms, we’re still bombarded by slick advertising, extolling the virtues of this or that must-have credit card or encouraging us to apply for a loan or a mortgage at rock-bottom rates of interest. Sometimes, however, amidst all the financial noise and claptrap, we do actually hear about a product that is of real benefit to the individual and to the local community and economy.
A good example of this is the micro loan. No, it’s not some newfangled kind of personal loan to help you buy the latest laptop or iPad. Heard of Pi Slice? Probably not. They’re based half-way around the world, in Dubai in the UAE. Pi Slice aims to link poor entrepreneurs in the Middle East to micro loans raised via social media. It’s a great idea.
Interesting, but so what? Micro loans are for poor third-world farmers and the like who earn so little no banks will ever look at them. Nothing much to do with us here in the West, right? How wrong you’d be! Heard of Opportunity Fund, California’s largest non-profit micro lender? They lend to small businesses in California who cannot obtain finance via mainstream lenders, such as the banks. Now that’s interesting, too, don’t you think?
Opportunity Fund has also just announced it’s expanding its micro lending activities to Greater Los Angeles. Home to more than 325,000 small businesses which employ nearly 2 million people, Los Angeles has more small businesses than any metropolitan region in the country. The non-profit lender will offer loans from $2,500 to $100,000 to businesses in Southern California, including Los Angeles, Orange, Riverside and San Bernardino counties from its branch office in Huntington Park.
Citi Community Development provided $100,000 in seed funding for the expansion to Los Angeles.
Opportunity Fund board Chairman David Krimm said, “Opportunity Fund has grown rapidly in the past few years in Northern California. We are investing in small businesses that are advancing the economic well-being of our Main Street entrepreneurs. Now it’s time to broaden our support for the small businesses in Southern California that have been shut out of the financial mainstream.”
Opportunity Fund concluded a successful pilot last fall to test its loans in the Los Angeles market.
In the coming year, Opportunity Fund will lend $4 million to help more than 600 entrepreneurs in Los Angeles to grow their business, boost their income, and hire new employees.
The micro lender describes its plan for growth as ambitious. In total, Opportunity Fund is poised to lend $12 million in 2013, helping 1,200 California entrepreneurs get the affordable financing they need, providing a path to economic prosperity for them and their families, and helping to rebuild the economy.
Opportunity Fund chief executive Eric Weaver added, “Through our lending pilot, Opportunity Fund was able to help business owners like Ana, owner of Arantxa Fashions in down town LA and Natasha and Freya, co-owners of Cool Haus ice cream in Culver City. The businesses we fund are truly remarkable engines of hope in Greater Los Angeles.”
Bob Annibale, Global Director of Microfinance and Community Development for Citi, said small businesses create 64% of the new jobs in the country.
He added, “The goal of this expansion is to provide financial inclusion for small businesses in California. It’s clear that micro finance is meeting a critical need, enabling very small business owners to access capital, obtain valuable business training and move their way into the financial mainstream.”
Learn more about Opportunity Fund and its micro loans here.
I don’t know about 3rd world microloans, but peer-to-peer microloans available in the US come with interest rates more in line with credit cards,
I can see why these would be popular in the UAE. Since the start of the great recesion they have tightened up their bank restrictions for loans which makes it very hard to get one unless you can 100% prove you can pay it back or you go to jail. My father in law has watched several developments that he was working on drag out for months because of this (and the “Insha’Allah” attitude in the area).