Working Capital, U.S.A.

Executive Summary

The Organiazation:
Working Capital is a national non-profit micro loan program created to address the unmet credit needs of the self employed. The program strengthens micor businesses by providing group-based support, loans, and technical assistance to self-employed persons with limited access to reources.

Working Capital is seeks to increase the income and success of the self- employed by providing loans, business assistance, and a forum for peer support. The program is one of the largest micro credit initiatives in the United States and works to create new opportunities for the self-employed by extending credit to those who would otherwise be denied loans under traditional guidelines. Beneficiaries report increased income, enhanced management skills, and improved self-esteem.

The Need:
Working Capital serves over 50 economically disadvantaged urban and rural communities across the East Coast including Massachusetts, Vermont, New Hampshire, Maine, Delaware and parts of Rhode Island and Florida. In Massachusetts, Working Capital was established to ease the un- and under- employment that increased dramatically during the recession. With the area's bread and butter industries -- manufacturing, defense, and fishing -- in decline, residents were laid off or forced to reduce their hours. As a result, these individuals turned to self-employment as a way to supplement or supplant their income.

Despite their numbers and economic importance, micro business owners from low income communities have little or no access to credit to support their business. Micro businesses often lack favorable credit histories, well- developed financial records and the collateral needed to secure a conventional loan. Additionally, micro business owners have few technical resources available and few opportunities to exchange ideas and contacts with peers.

The Model:
The Working Capital peer-lending program issues loans and technical assistance to groups of 4 to 10 micro business owners. Working Capital peer groups meet regularly to exchange ideas, participate in a self- guided 20-module business curriculum, and review fellow members loan applications. Peer groups are responsible for reeviewing loan proposals as well as ensuring that members repay on time. Working Capital requires that the entire group be current on their loan paymemnts before any member can access a new loan. Loans start at $500 and increase in increments of $500 up to the maximum loan size of $5000. Operations:
Working Capital implements the program within each community through local business councils, community development centers, non-profit organizations, and housing agencies. Local "Enterprise Agents" are recruited and trained to market the program and organize peer groups in their community. Regional Directors provide Enterprise Agents with the necessary training and educational materials, while community partner organizations oversee the program and provide administrative support to the Enterprise Agent.

Banks and other institutions provide lines of credit to Working Capital's central office, which disburses the loans to the entrepreneurs and monitors their payments. Working Capital bank lenders include Bank of Boston, Fleet Bank, Mereditih Village Savings Bank and Vermont National Bank. Working Capital supplements bank capital with low interest Program-Related Investment (PRI) from John D. and Catherine T. MacArthur Foundation, the Calvert Fund and the Episcopal Church's Burgess Urban Fund.

For more information on Working Capital: Tel: 1-617-576-8620 Email:
Additional information on Working Capital from USAID's Lessons without Borders
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