We hear the term microlending frequently these days, particularly in the context of developing countries and crowd funding. While microlending has its roots abroad, increasingly it has become a part of the lending landscape here in the U.S. One way to think about a microloan is in terms of amount. The Small Business Administration (SBA) recently increased the defined amount of a microloan from $35,000 to $50,000. Conceptualizing microlending more broadly, however, gets at its real meaning and purpose: lending to those who might not typically qualify for a more traditional loan. At CEI, we target our microloans to disadvantaged borrowers as defined by the SBA and our target sectors in the lending platform, this often means loans to recent immigrants and refugees, minorities, women, veterans, and people with low incomes who don’t have credit histories or the typical assets a lender might look for.
CEI has been in the business of microlending since before the term ‘microlending’ existed. Microlending draws on all of CEI’s strengths and core values: providing capital and business counseling to rural and non-traditional entrepreneurs to foster economic return and community growth. Since 1977, microloans ($50,000 and under) have comprised 56.6 percent of CEI’s 2,356 loans to small businesses. Fully 78 percent of microloan borrowers were women or co-entrepreneurs.
In October 2012, CEI launched the $128 million Platform for Sustainable Lending and Investment, a commitment to deploy $128 million in grants, loans and investments by 2017, creating employment, income and ownership for people outside of the economic mainstream. Microlending is a key part of that strategy, directly speaking to our mission. Since the launch of the Platform, microloans have supported the creation or retention of 275 jobs. Approximately 23 percent of borrowers were minority business owners (in Maine, a state with a minority population of 5 percent).