Microenterprise involves the provision of small business loans to low-income entrepreneurs seeking to start their own businesses. The model has been used to help the poor increase their incomes, build financial assets and create employment for themselves and others.

Empirical work by Morduch and Haley (2001), Robinson (2001) and Barnes and Keogh (1999) have found that microenterprise can improve employment opportunities and help to reduce household poverty.

In this section, we highlight one such initiative, Project Enterprise, a non-profit organization that operates a loan program for low-income entrepreneurs in the Bronx.

Poverty

• About 30 percent of Bronx County residents live below the poverty threshold, compared with 19.1 percent of New York City residents.

• Median household income for Bronx County is $29,228—roughly two-thirds of New York City’s median household income of $43,434. Unemployment in 2005 was 11 percent, compared with 8 percent for the city.

• The areas of concentrated poverty in Bronx County are in the southwest (See Figure 1). These communities have more than 40 percent of the population living below the poverty threshold.

Project Enterprise: A Small-Business Initiative

• Loans from Project Enterprise are intended to foster increases in income through self-employment opportunities.

• Project Enterprise’s model is patterned on the lending model introduced by the Grameen Bank of Bangladesh in 1976. The Grameen Bank targeted their products to poor women who existed “outside the banking orbit.” As of May 2006, the Grameen Bank had lent to a total of 6.39 million individuals, 96 percent of whom were women, in 26,140 communities throughout Bangladesh.¹

• Project Enterprise's products are targeted to borrowers who have not been able to secure traditional financing due to poor credit or no prior credit history. Project Enterprise relies on a peer lending model to help manage risk. Peer lending programs manage portfolio risk by working closely with individuals, providing peer support and actively following a borrower's progress.

• As of 2005, Project Enterprise had trained more than 1,300 entrepreneurs and lent over $730,000 in funds for microenterprises. Typical loans ranged from $750 to $1,500 with terms from 6 to 24 months.² The lending is targeted to both men and women, but the majority of borrowers are women.

Figure 1
Percentage of Bronx Population in Poverty by Census Tract, 2000

Source: Census 2000, U.S. Census Bureau, U.S. Department of Commerce, Economics and Statistics Administration.

Endnotes
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¹See Grameen Bank.
²See Project Enterprise.

December 2006