Start small to rebuild America’s middle class
Last month’s political party conventions set the stage for an election season like no other. There are bitter divisions over common concerns — among them, wealth and income inequality, which have been on the rise in every U.S. state since 1980.
Our country faces persistent economic marginalization of women, minorities and the working poor of every race. Sweeping reforms are needed, and persistence is critical to break through a hopelessly gridlocked Congress.
Thankfully, there are groundup solutions to income inequality that each of us can support — right now — regardless of what happens in Congress or the November elections.
Understanding our local and small business economies is a critical part of bridging wealth and income gaps in the United States. Studies prove that across all demographics, small business entrepreneurship is associated with driving innovation, job growth and personal satisfaction, and that small and local businesses are responsible for employment growth, rural economic development, per capita income growth and even a lower poverty rate at the community level.
At Kiva.org/US, we focus on crowdfunding zero interest loans to small business owners who are excluded from other financing, have a social impact and create jobs: cafes hiring at-risk youth and providing job training; small businesses giving a second chance to the previously incarcerated; refugees sharing their culture through food and artisan enterprises.
It is a movement that anyone with an internet connection and $25 to lend can be a part of.
Victor is one of those people who had the passion and plan. He just needed a little support. Victor was forced to abandon his education at a young age to help provide for his family. After years of working at cafes, his dream was to start his own and hire people in his San Francisco community.
Despite diligently saving money, he was repeatedly turned down for conventional small business loans due to lack of collateral and a business history. But when banks stepped back, 67 people stepped up by crowdfunding his loan to open not just one but two cafes. Four years later, Victor has created 13 jobs and is pursuing his ambition to open a coffee bean roasting company.
Victor is not alone. For most, traditional lending is not a viable option. In fact, eight out of 10 small business loan applications are denied by traditional lenders. Minorities are up to three times more likely to be denied, and although women represent 30 percent of all small company owners, they account for only $1 of every $23 in small business lending.
Of course, women and minorities are not the only ones facing barriers when it comes to starting a small business. Refugees, immigrants of every race, young people, veterans, entire regions from Appalachia to the Northwest and anyone emerging from the Great Recession with a damaged credit score is bound to face difficulties.
Indeed, the majority of the borrowers using Kiva in the U.S. were initially turned down elsewhere. Yet these same borrowers, once given a chance, make real economic impacts in their communities.
Up against the social and economic problems of the day, we cannot forget about the small steps that take us in the right direction, from supporting the individuals and small shops that are the mainstay of our communities; to empowering those searching for a foothold in the middle class.
When enough of these small steps are taken by enough people, there is opportunity to continue building momentum for a better economic future, from the ground up.