WSEP’s training and loans allowed Green to join a nationwide boom in businesses owned by women, which account for nearly 40 percent of all American firms. Although, most have fewer then 10 employees, they are fueling economic growth, according to a new study on global entrepreneurship conducted by the Kaufmann Center for Entrepreneurial Leadership in Kansas City. The study found prosperity in countries with high business start-up rates. It also found that high start-up rates depend on the participation of women entrepreneurs.

“The earliest microenterprise work in the United States happened in the women’s movement,” says Sara Gould, executive vice president of the Ms. Foundation for Women. After a decade of experience in the field, the Ms. Foundation created a funding collaborative with Ford and other foundations in 1991. Because so many women were outside the economic mainstream, this approach was particularly well suited to their needs. “Women continue to be at the center of this work, representing the majority of clients and the leading innovators,” Gould adds.

“Women are on a rampage,” says Sherrye Henry of the SBA. “They are starting new firms at twice the rate of men. The future of women’s microenterprise is going to be huge.”

Traditionally, women’s microenterprises have operated out of the home, informally, in unlauded activities that range from baking to childcare to making jewellery. This kind of work had never been given much value. “Women were not seen as a constituency for the economic development process,” Gould says. That began to change during the early 1980s, a period of high unemployment. “Low and moderate-income women were going into dead-end, clerical jobs.” Recalls Connie Evans, WSEP’s president and founding director.

“Self-employment was a more productive way for them to come into the economy.”

The microenterrprise model most widely embraced in those years originated with the Grameen Bank in Bangladesh. Grameen’s program targeted the rural poor, who needed very small amounts of money to get their businesses off the ground. They were invited to form small peer lending circles, whose members would make joint lending decisions and guarantee each other’s loans. The program has been extremely successful. Since 1976, the Grameen Bank has lent $2.6 billion to 2.4 million borrowers - 95 percent of them women - with an enviable 95 percent repayment late.

The Good Faith Fund in Pine Bluff, Ark., was the first organization to adapt the Grameen model to a rural setting in the United States; WSEP was the first to apply it to an urban environment here. Both organized peer lending circles of four to six women who received personal support, business advice and a chance to take out loans.

Some peer borrowers have thrived. One Pine Bluff entrepreneur, Brenda Kearney, built a booming dry-cleaning business within six years of taking out her first loan. Today Kearney owns her building and has nine employees, according to Penny Penrose, who directs the Good Faith Fund. Kearney plans to apply the expertise she gained in her peer lending group to her new position as a member of a commercial loan advisory committee at a local bank.

Over the years, WSEP borrowers have included women like Green who have been on welfare as well as others with moderate incomes. Most have been women of color, and none have had resources available to them to start businesses. Glenda Lewis used a WSEP loan to buy the sleek, six-passenger Elan Private Coach that she uses to chauffeur people through Chicago’s streets. WSEP backing enabled Renee Vance-Smith to operate a thriving gift shop at Doctor’s hospital of Hyde Park.

As a participant in pilot projects, WSEP was one of the first organizations to set up Individual Development Accounts, which allow poor people to accumulate savings to purchase a home, go to school or build a business. The theory behind the IDA program is that moving out of poverty depends not only on income, but on the ability to build assets.

Sonia Soto was one of the first to use an IDA. Her family landed on welfare after an accident left her husband unable to work. Then one of her checks arrived with an ad for WSEP’s entrepreneurship training course. Soto, an experienced cosmetologist, signed up for the course, but she had too many family expenses to commit even to a small loan, so she enrolled in the IDA program.

After two years, her savings and WSEP’s two-to-one match added up to $2,500. When the owner of a local beauty parlor decided to close her business and rent the space and equipment, Soto jumped at the chance. Last March, she opened Serenity, House of Beauty in the Chicago suburb of Berwyn. “I had to pay rent, utilities, all kinds of bills at home,” she says. “I could never have started my business without the IDA.” Six months later, she was doing well enough to hire an assistant.

As the microenterprise movement in the United States has grown, its practitioners have transformed the old Grameen model, looking for ways to adapt it to conditions here. WSEP and others, for example, are concluding that peer circles are not the most efficient mechanism for lending to low-income women. Many participants joined the circles seeking the support of other women and were not ready to take out loans; that meant no interest income for the microenterprise agencies. The lending process was cumbersome. The first two borrowers had to make several on-time payments before other participants could get a loan, and lending was suspended if someone missed a payment or dropped out. Loan decisions were made by the group, which meant that each member had to share personal financial information with everyone else.

With the notable exception of Accion International, which still works with peer circles in New York City and Texas, based on a Latin American model, the trend in the United States is to phase out peer lending in favor of direct loans. The Grameen model’s influence survives, Evans says, in such practices as “stepping” (starting with very small loans and allowing successful clients to borrow larger and larger amounts), providing peer support and securing loans with modest assets that include everything from old car titles to dining room tables.

It has also become evident that an advanced market economy calls for more elaborate and costly training and technical assistance than the Grameen model. “If you’re making clothes, your competition is Wal-Mart,” says Connie Evans. She points out that government regulations as well as tax, licensing and welfare laws further complicate the process.

To hone a competitive edge, a group of WSEP’s borrowers formed a food cluster. As they sat together one evening in the agency’s downtown Chicago offices, one of them, Gilda Clark, showed her colleagues and the group leader the brochure she developed for her company, Breads of Life, featuring photos of her zucchini nut loaves carefully arranged with red roses in wicker baskets. Developing new markets has become a hallmark of the nation’s microenterprise organizations, and the food cluster is one of WSEP’s new marketing tactics. Evans and her staff created that strategy in 1998 after observing that many cilents hit a growth plateau and were unable to find better and cheaper ways to produce, market and distribute their products. “Now we’re planning to start our own food company on the Web market gourmet foods,” Evans says. “We’re going to be the next Amazon.com.” They plan an interactive site, with chat rooms and recipe sharing, and WSEP will earn a commission from its sales.

As it has grown, WSEP has become a pioneer advocate for changes in public policy to benefit low-and moderate-income women entrepreneurs, particularly those on welfare. WSEP led a campaign for 1995 legislation to legalize home based businesses in Chicago. It also supported the passage of the nation’s first statewide self-employment exemption, which allows entrepreneurial welfare recipients to accumulate up to $5,000 in business assets without affecting their eligibility.

Similarly, ACRE Family Day Care in Lowell, Mass., persuaded the local welfare office to consider participation in its training program for child-care providers, a community service job. As a result, trainees can retain benefits while learning to provide home-based child-care.

ACRE also helped to negotiate the largest state reimbursement rate increase for home day care workers in the country. Today its providers earn an average of $29,700 a year, more than the national average income for child-care providers. And ACRE is working with other advocacy groups for state child-care contracts that include health insurance for its home based providers.

Microenterprise organizations are also changing their vision of the role they should play. Most originally set out to show that self-employment by itself was a route to self-sufficiency for low-income people. But for many who have worked their way out of poverty, it has not been that simple. In its recent study of low-income microentrepreneurs, the Aspen Institute found that among the 53 percent who moved out of poverty, many derived their income not from a microbusiness alone, but from a combination of self-employment and wages. Even in a booming economy, the study reported, many were locked into low-wage jobs and required more than one source of income to meet family needs. Others look to self-employment to achieve flexible hours in order to tend to their families. Nonetheless, for those whose businesses survived the full five years of the study, the main source of increased income was from self-employment.

The study termed this blending of different income sources patching, and identified it as a trend with broad implications. “When you listen to the futurists’ talk,” Evans says, “ they project that 50 percent of the work force will be contingent workers. That means more and more people will need the know-how to maneuver in and out of wage and self-employment, including professionals and highly skilled workers.”

Carrie Ferguson is preparing for just such a future. As a high school senior in Stewart, Ohio, she enrolled in a program at the Appalachian Center for Economic Networks that combined computer training with entrepreneurship development. Ferguson, who knew nothing about computers before the class, emerged from the year long program as a computer consultant.

“Last summer, even though I worked another job at Wendy’s, I ran 14 hours of computer training sessions and made $ 400,” she says. “ For me that was a huge jump, coming out of a family that never made more than $8,000 a year.” Along with running her own consulting business, she now works as a trainer in her college’s computer lab. She plans to enter the field of social service and has no doubt about the value of learning to be flexible. “This experience has taught me I can do anything I want,” she says.

Angela Bonavoglia is a journalist and communications consultant to foundations and other nonprofit organizations. This article is extracted from Ford Foundation Report, Winter 2000.