A Little Money To Take Big Steps

Silvia Dillard wasn’t exactly a banker’s dream customer. The only collateral the 34-year-old mother had was an entrepreneurial spirit. Banks don’t tend to count on spirit. It’s so hard to repo.

Besides, the Bostonian raising three kids on her own is the first to admit that her personal credit was “shot to hell.” After a brief stint on AFDC, after years of working over and under the table, Dillard says, “I didn’t see any light at the end of the tunnel.” But the independent woman had a dream of starting her own business.

So for that matter did Kathleen Gaskin. An upholsterer ever since she worked for her father in Trinidad, Gaskin came to a crunch time when she was divorced with three daughters and an autistic son. Her son’s school bus and her employer’s inflexible hours collided: “I knew I had to be self-employed.”

What these two women lacked was working capital. At least $500 for Kathleen to get a foam-cutting machine and staple gun. At least $500 for Silvia to purchase a vacuum cleaner, supplies and business cards to promote the wonderful name of her new cleaning company, MAAD: Mothers Against All Dirt.

And what these two women found was Working Capital. They connected with the largest of the handful of programs in this country that are acting as banks for the bank-less. In this case about 2,400 bankless women and men in 10 states.

Working Capital offers microcredit - loans between $500 and $5,000 - to people, mostly women, through organizations in poor urban and rural communities. These are loans too small for banks to bother with and borrowers too risky for banks to gamble on.

The idea began in Bangladesh 20 years ago and spread to some of the poorest pockets of developing countries where $2 can make all the difference. Now despite its thoroughly unsexy name, microcredit has become as much a movement as an economic development program.

Indeed on Thursday, Jeffrey Ashe, the former Berkeley free-speecher and former Peace Corpsman who founded Working Capital, was given one of the first-ever Presidential Awards for Excellence in Microenterprises. And the first Microcredit Summit, which opened Thursday, is expected to bring 2,000 people from around the world to Washington, D.C., to launch a global campaign to reach 100 million of the world’s poorest.

Like many of the overseas microcredit enterprises, Working Capital is not just a money lender. The heart of the nonprofit operation is community building through group lending.

Customers, as they are called, organize into small loan groups like the one that Silvia Dillard has dubbed SWIMM: Smart Women Independently Making Money. “They support each other, train each other, hold each other accountable,” says Ashe, a tall gangly 55-year-old who helped bring the movement here in 1990.

SWIMMers, for instance, meet once a month and talk once a week. They help each other with everything from child-care tips to financial advice. Indeed, Ashe’s wife, a psychologist, likes to compare it to group therapy: Only instead of paying money, they’re making it.

The members borrow money as a group and must repay it as a group. One deadbeat freezes everyone’s credit. The mutual support is also peer pressure. As Dillard laughs, “I know, sooner or later, I’m going to see Kathleen in the supermarket.”

This personal connection may be why Working Capital has only had to write off 3 percent of its loans to a population of borrowers the banks consider high risk. It may be why microenterprises are being seriously touted as a possibility for some women who will be coming - ready or not - off the welfare rolls in the next few years.

Sometimes, a small loan and a strong support group is what’s needed to bridge the gap between an idea and a business, between dependence and independence.

Today Silvia Dillard is paying off her first loan, restoring her credit and building up her roster of MAAD customers. Kathleen Gaskin is now on her fourth loan cycle, about to borrow $2,500 to renovate the upholstery shop that supports her family.

They exude the confidence that comes from “being my own boss.” And from having their own network.

For Jeffrey Ashe, Working Capital also says something about how you build community in a time when the safety net is unraveling and jobs are scarce:

“There’s a lesson here about how we can get through the millennium and not just by surfing the Net. This is about old-fashioned face-to-face accountability, about trusting and supporting each other.”

The “lesson” of microcredit is the real new math. It’s thinking big about lending small.

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