A small group of nonprofit organizations is testing financing programs to help low-income individuals start and sustain businesses. The 2-year pilots were made possible by grants from the Aspen Institute, a non-profit organization in Washington, DC. Two of the innovative programs create a micro-venture-capital fund and establish a Business Investment Trust, respectively:
- Coastal Enterprises Inc. (CEI), a Wiscasset, Maine, economic development agency, will make investments through its micro-equity product of up to $25,000 in sole proprietorships, partnerships or corporations that are operated by individuals from households with low incomes, create jobs for low-income residents or are in the natural-resources and organic-farming industries. The investments are for five to six years, and the exit strategies vary by company.
CEI also offers grants of up to $700 (available in two stages) to low-income entrepreneurs. Business owners must submit a business plan, then follow up three months later with a report on how the grant proceeds were used. The grants are made possible largely through a partnership with the Trickle Up Program, based in New York City. For details on the programs, call (207) 882-7552. Both CEI programs are intended for residents of Maine only.
- In Wisconsin, the West Central Wisconsin Community Action Agency Inc. has created the Business Investment Trust. The program is open to new and existing businesses operated by residents with low household incomes in the counties of Barron, Dunn, Chippewa, Pepin, Pierce, Polk and St. Croix.
Participants obtain loans through the agency's revolving loan fund. Forty percent of the loan repayment is placed into an escrow account, and if all payments are made on time for 12 consecutive months, the borrower can receive another loan for 40 percent of the repayment value. For more information, call (715) 265-4271.