Subscribe to Entrepreneur for $5

Small Loans for Soon-to-Be Big Businesses

Use microenterprise loans to help make micro a temporary condition.


Things were looking pretty bad for Margaret Quenemoen back in 1991. Her run of bad luck started with breaking her ankles, being out of work and having to live in her car. But hope came in the form of headbands she made for the winter sporting community in Telluride, . She hit a resort restaurant and ended up selling all of them to the tune of $130.

"I was living in a beautiful mountain town, and I wanted to stay-I didn't want to go home [to live] with my parents," she remembers. "I realized that I could start a ."

She became a licensed street vendor and kept receiving requests for more items-shirts, vests, pants. "It was apparent I had a real business going," says Quenemoen, 41. When she took her wares to a trade show and scored an $80,000 purchase order, she knew she'd need some funding to grow her company, Jagged Edge Mountain Gear Inc.

Enter the Utah Microenterprise Loan Fund (UMLF) in Salt Lake City. Quenemoen went to her local Development Center, which sent her to UMLF. "With their help, I built a and I got that loan," she says. "Not only was the money critical, because I'd been turned down everywhere else and all my credit cards were maxed out, but they [also] gave me support." The support consisted of small-business classes with other startups and connections to business mentors.

That type of help is typical of a microenterprise loan program, according to Bill Edwards, executive director of the Association for Enterprise Opportunity (AEO), the national association of microenterprise development in Arlington, Virginia. "I would say virtually every microenterprise program provides training and technical assistance to an entrepreneur," he says. "Or, if they don't directly provide that service, there's an information referral-to a local community college, for example."

The information is just as valuable as the money to these entrepreneurs, many of whom are in the early stages of their ventures and have very little business experience. In fact, the term "microenterprise" is defined as a company with fewer than five employees that is seeking $25,000 or less in capital. According to the AEO, there are currently 2 million microentrepreneurs in the United States today. "If someone wants to start a business, their chances of success are going to be much greater if they work with a microenterprise program," says Edwards.

That was certainly the case for Quenemoen, who now sells her Jagged Edge line of products in three retail stores in Colorado and online at She recently paid off the $10,000 loan she received through the microenterprise program and expects the company's 2002 sales to hit $2.8 million. "I would definitely send [other business owners] to the microenterprise loan fund," she says. "If they're not in the Utah area, I'd refer them to one in their community."

What Now?

Your first step in seeking microenterprise loan funds should be to check out, the Association for Enterprise Opportunity's (AEO's) website. There, you'll find a listing of organizations that offer microenterprise funds in addition to general small-business support. Most of these programs require a business plan, but many of them offer assistance with that step, too.

Your local Small Business Development Center, chamber of commerce and banks should also have information on programs available in your community, says Bill Edwards, executive director of the AEO. Keep in mind, though, not every program will have the word "microenterprise" in the title-you'll have to do some investigating. Still, says Edwards, "A little time spent doing research is time well-spent."

Entrepreneur Editors' Picks