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Women’s Policy, Inc.Washington, DC
November 10, 2010
Lynne Cutler, President
2010 Chestnut StreetPhiladelphia, PA 19103
Telephone: (215) 564-5500 Facsimile: (215) 564-0933Website: www.worc-pa.com
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Mission, Services, & Philosophy
Mission To promote social and economic self-sufficiency for economically
disadvantaged women and their families.
Services Microenterprise Training
Microenterprise is a business with:
1-5 employees
Capital needs under $35,000 (50k)
Access to Capital
Incentive Savings Program
Philosophy Asset-Building Strategy
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WORC Accomplishments
Impact Trained 3,000 individuals; 800+ businesses currently
generate $20 Million in annual revenues;
361 loans totaling $1.18 million 1000+IDA graduates; Economic impact of $36.7
million. Awards/ Recognition
Presidential Award for Excellence in Microenterprise Development, U.S. Department of Treasury (2001).
Technology Innovation Award for Building Blocks to Financial Success (2005).
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Financial Disparity in America
Income Poverty: 12.3% of Americans live
below federal income poverty line
Asset Poverty: 27.3% of families with
children have less than 3 months’ savings
37.2% of minority population have zero or negative assets
Statistics: CFED Assets and Opportunities Scorecard, 2010
Why Microenterprise? History
WORC’s Microenterprise Program Started in 1985 500+ Microenterprise Programs nationwide
Importance Viable Career Path Small Business
Small businesses created 60-80% of the net new jobs since the mid-1990’s.
87% of all businesses in US today are microenterprises Women start businesses at twice the rate of men
Strengthen Communities Buy local Tax revenue
Precious Jewels Daycare – Elsie D
Home-based day care center since 1998 with 3 employees.
Revenues of approximately $75,000/year.
Developed business plan and registered business as S Corp.
$1,800 loan to buy a computer, fax machine and copier and a $2,500 loan for a down payment to expand her business to a larger facility.
Grew business – also trains Haitian immigrants on establishing of day care business
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Classic Design Jewelers - Diane C.
Virtual jewelry store - 1998 Two employees $150,000 annual gross sales
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Why Microenterprise?
1990-91 & 2001-02 recessions: More businesses started up than closed down Creation rate goes up in a downturn
"Starting a business in a recession is like vacationing in the off-season. It's a little less
crowded, and everything starts going on sale.“–Eric Ryan, Method Cleaning Products
Statistics: SBA, US News & World Report, NWBC, US Census
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National Research
Microenterprise reaches traditionally disadvantaged populations (women, minorities, and low-income households)
813 clients study, 1 year after receiving services: 60% in business full-time Average revenues for full-time owners $111,185 36% net reduction in number of owners whose
families lived in poverty
Aspen Institute 2005
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WORC’s Microenterprise Training Program
Training 36 hours, 6 weeks, 2 times per
week. Management, Marketing, and
Financial. Trainers with business experience.
Individual Business Assistance Market Access/ Commercial
Linkages WORCweb.com: Online business
directory. Access to contract opportunities. Participation at expos.
Capital
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WORC’s Training Impact
70% complete training 40% start or expand their business
within six months 30% employed or pursue further
training 50% stay in business over time
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Keys to Success
Practical / action-oriented Trainers - business people Intake criteria Peer support One-on-one counseling Access to capital Market access & commercial linkages On-going support
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Markets Served
Low-income/Underemployed workers People with disabilities Dislocated workers (SEA) Retirees (RIS) Immigrants
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Self-Employment Assistance (SEA) Program
1993 North American Free Trade Agreement (NAFTA) HR Bill 3450, Title V, Sec. 507
Allows unemployed individuals to receive UC benefits while starting a business.
8 states participate: DE, ME, MD, NJ, NY, OR, PA, WA
1997 PA HR Bill No: 1475 established PA SEA Program
PA SEA Results – 1997 to 2008 Over 1,700 businesses statewide
$45 million in annual revenues $8.8 million employee annual earnings
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SEA Program Results
Overall Results 800 businesses
$20 Million annual gross revenue 250 additional jobs created $4.6 Million annualized payroll
Aspen Institute Follow-Up Study FY 2006 WORC Participants 73% operating a business one year after receiving services 90% still in business at 18 months $4 million gross annual revenues with estimated $240,000 sales
tax revenue in 2007 1 in 5 businesses created new jobs Cost per business created $4,315 Cost per job $2,890
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Family Care Giver’s Network- Geraldine F.
2001 Lost job as Director of Private Duty Nursing.
Established nursing and staffing agency.
$2,500 start-up loan. 45 employees. Annual gross sales
$350,000.
Mugshots Coffeehouse & Café – Jill F. & Angela V.
Completed training in 2002 2 coffee shops Voted Best of Philly 2005 Committed to positive
contribution to the community by being mindful of the environment and their neighbors, both locally and globally.
sends day’s end surplus food to a local homeless shelter.
Leaders formed a cooperative of local independent coffee houses
Turned profitable after just one year.
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Barriers to SEA Implementation
Not eligible for extended benefits
Funding Performance standards PA 15 benchmarks:
Completion of training Business plan Legal entity Checking account Home office Lease signed Equipment & supplies Marketing package Solicited customers Insurance Licenses Staff Schedule C for Income Tax Full-time Other
Sen. Wyden (D-OR) Proposal – “Self-Employment Assistance Act of 2010” Self-employment assistance programs were
established following enactment of NAFTA in 1993.
Self-employment assistance programs serve as a cost-effective method for promoting rapid reemployment & reducing time individuals require unemployment compensation.
In 2009 more than 588,000 business were started every month in the United States.
Self-Employment Assistance Act of 2010$150,000,000
(Under Development by Senator Wyden)
WHO CAN APPLY: States that has already enacted self-employment assistance programs, or States that establish programs and wish to extend the program to eligible
individuals. COVERED COSTS:
100% of allowances paid to individuals, plus administrative expenses incurred by State.
CONDITIONS: Number of individuals receiving Self-Employment Assistance may NOT exceed
1% of the number of individuals receiving unemployment compensation. ONE grant per State.
Eligibility
Any individual who was not eligible to participate in SEAP while collecting unemployment because:
1. They were not identified as likely to exhaust their regular benefits, or2. SEAP was not available in their state.
Any individual who is eligible for emergency unemployment benefits.
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Why Provide Access to Capital?
Lack of access, especially among low-income & women
48% increase in demand for microloans since May ’08
Repair credit through financial education & counseling
Pathway to traditional financing
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Small Business Job Act of 2010 – HR 5297
Modernizes and increases SBA funding: Max. size of microloans increased
from $35,000 to $50,000. Increased microloan intermediary
borrowing cap from $3.5 million to $5 million.
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Economic Opportunities Fund Loan Products
Impact 361 microloans totaling $1.18 million
Products Credit Builder Loan- $500 to $1000 Line of Credit - up to $2,500 Small Business Loan - up to $20,000 Near Equity Product - up to $35,000
Use of Funds: Start Up Costs Working capital Equipment Inventory
“Step” loans
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Beautiful Beginnings Childcare, Inc. - Lalita P.
Certified childcare instructor 3 loans:
$2,500 Start-up loan in 2004
$2,500 to continue marketing & outreach
$7,000 for 2nd location start-up costs
14 employees 50 children Grossed over $200,000 in
2nd year of operations Recently opened a 2nd
childcare center
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Pennsylvania Family Savings Account Program Developed in partnership with PA
Governor’s Office in 1997 One of largest statewide IDA
Programs in nation. One-to-one match up to $2,000. Savings can be used for:
Business start-up or expansion Home purchase/home
improvement Education for themselves or child Other (car, debt/credit repair)
Basic Financial Education Classes.
Why Savings & Assets? Pew Economic Mobility
Higher personal savings promote greater upward income mobility
66% of individuals who had low savings remained in the bottom quartile of personal wealth compared to 45% who had high savings
71% of children of low-income, high-saving parents are more likely to experience upward income mobility compared to 50% of children of low-saving parents
“A Penny Saved Is Mobility Earned,” Cramer, R., O’Brien, R. et al CFFI 2009
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WORC’s Family Savings Account Program – 9/30/10
1010 graduates Home purchases: 245 Home Improvement: 156 Education: 124 Business: 58 Retirement: 51 Car: 228
Economic Impact $36.7 million $2 million saved $1.8 million matched
Leveraged with $ 3.1 million in personal savings and other resources $ 29.6 million in mortgages and loans
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National Research
Current research on the outcomes and impact of asset-building IDA programs show IDA savers are: 84% more likely to own a
business. Twice as likely to attend college. 35% more likely to own home. More than half who previously
received public assistance no longer receive assistance
Low incidence of foreclosure 1 of 171 in WORC’s study
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Community Economic Development Benefits
Homeownership Real estate taxes More stable community Equity for future business
start-up Education
Workforce Small business
Job creation Tax base
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INVEST NOW!Federal Funding Sources
Program Enacted FY2009
President Request FY2010
House Request FY2010
Senate Request FY2010
SBA Microloan $21 million $25 million $25 million $25 million
Technical Assistance $20 million $10 million $10 million $22 million
PRIME $5 million $3.1 million $8 million $5.5 million
Women’s Business Centers $13.8 million $13.1 million $14 million $14.3 million
Treas. CDFI Fund $107 million $243 million $244 million $167 million
HHS Assets for Independence (AFI) $24 million $24 million $24 million $24 million
Beginning Farmer and Rancher IDA N/A $5 million none none
HUD Community Development Block Grants $3.9 billion $4.5 billion $4.6 billion $4 billion
USDA Rurdev
Rural Business Enterprise Grants $38.7 million $38.7 million $38.7 million $38.7 million
Intermediary Relending $33.5 million $33.5 million $33.5 million $33.5 million
Rural Microentrepreneur Investment $4 million $22 million $4 million $22 million
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Economic Development – Useful Websites
Program Website
CFED cfed.org
AEO microenterpriseworks.org
Opportunities Finance Network opportunityfinance.net
CDFI Fund cdfifund.gov
Rural Entrepreneurship Center ruraleship.org
Renewing the Countryside renewingthecountryside.org
Individual Development Accounts
www.ida.gov
SBA Micro-loan Program www.sba.gov/financial