Tuesday, August 4, 2009

IS MICROFINANCE THE ANSWER FOR SMALL BUSINESS IN AMERICA?

Can We Learn How To Help America’s Entrepreneurs From Third World Countries?


American business has driven success, innovations and financial stability for this nation for as long as we can look back in history. It is the business spirit that brings about employment, prosperity and builds greater ties across continents.

This very notion of entrepreneurship is as American as ‘Apple Pie.’ But this building block of Americanism is being threatened because small and mid-sized businesses are finding it near impossible to find funding for start-ups and innovations.

For a very long time now, I have looked at how the developing nations have nurtured business and ultimately their economies. One of the most remarkable developments in the Third World has been the concept of microfinance. A system that has reached our shores, but has not been nurtured to its full potential.

Broadly speaking the ‘movement’ of microfinance is one that believes poorer households should have permanent access to high-quality financial services including credit, loans, savings, insurance and fund transfers. Advocates of the system believe microfinance will help people out of poverty by giving them financial freedoms, which in turn will be passed on to the wider community and economy.

This does not mean microfinance lenders should give loans to those that banks deem to be ‘risky,’ rather lenders of microfinance will be better able to judge the risks because they are not blindly accepting high risk – something we have seen rampant in the current crisis.

Now the system of microfinance seen in places like Bangladesh, India and many of the African countries is not necessarily the system that will work for us. In fact microfinance is not a ‘one size fits all’ practice. In the US it has to differ, because we do not see the levels of poverty and harsh political upheavals as the developing world. We are also a country that has a welfare system for the low-income.

The microfinance that should be fostered is a system geared to help the American entrepreneur in an America that is looking towards a new and better future. This ‘new’ form of microfinance should be able to work by giving start-ups and mid-sized business the monetary opportunities to bring about economic development in their communities. These businesses have always been the backbone of this country and are sadly being rejected by mainstream financial institutions.

Lets start today by helping American business. If you have a business idea, want to get a start-up off the ground or are already involved in microfinance, contact me at jay@thecousinsgroup.com Let’s get your idea working!