Recent studies suggest that microenterprise programs are not a viable way to lift a large proportion of people receiving welfare out of poverty because the strategy is difficult to implement on a large scale. Nevertheless microenterprise programs have been demonstrated to be successful in helping poor people who are relatively well educated, start or expand businesses. Programs that offer people training as well as financing for their start-up businesses are more successful. People who start businesses through microenterprise programs often have access to other resources, such as income from a spouse or their own welfare benefits, to supplement their earnings. And finally, microenterprise programs must themselves be cost effective.
Cost effectiveness can especially be a challenge in rural areas.
Economic development in rural areas poses special challenges because of the geographic isolation and sparse population in many locations. Minorities and people living in poor neighborhoods often have difficulty obtaining loans from commercial banks and other for-profit institutions. And finally eliminating discriminatory lending practices should be a priority in every community. Visit the Viable Economies section of this Web site.