Microlending at Crossroads After 20 Years

One bank told Jay Rice his credit score was "garbage" when he tried to get a loan to start a landscaping business from his home in a run-down section of Miami.

Fidel Albelo thought he’d do better when he wanted funding to expand his print shop. He had his personal accounts with his bank for more than a decade. But he also got turned down – because his credit history wasn’t established long enough.

Both men got lifelines from a microlender, a non-profit organization that specializes in making small loans to businesses. Microlenders give business loans of less than $35,000 and focus on businesses with five or fewer employees.

"They’ve saved my butt, you know what I mean? I would endorse them over any bank. I would endorse them over any financial institution. I would endorse them over any government minority business program," said Rice, who got a $4,000 loan at about 12 percent interest.

Microlenders are becoming more popular, but they are at a crossroads. The money that they lend comes from government grants and foundations, whose generosity ebbs and flows with the health of the economy. And after two decades, they still don’t have enough customers to be self-sufficient.

By JOHN PAIN
The Associated Press

Full Story: http://www.phillyburbs.com/pb-dyn/news/24-05222005-492859.html