SAN FRANCISCO - Small business owners seem to get hit from both sides these days. Those who want to start a company can't get away from the recession and existing owners find it hard to get back on their feet.
A microloan could be just the answer for this crucial part of the American economy.
When you think of microloans, images of workers in developing countries might come to mind -- not people living in tech-savvy regions like California's Silicon Valley and beyond.
However, microlending -- which has helped the world's poverty-stricken for decades -- is booming in these areas.
"It began on the principle that a little bit of financial advice and small sums of money at the right time can make a permanent and lasting change in someone's life," Caitlin McShane, with the nonprofit organization Opportunity Fund, told CBN News.
Investing in Dreams
More than 3.4 million small businesses call California home. They employ half of the state's private sector workers, but 45 percent of small businesses fail because they're not able to get the loan they need.
A microloan can change that.
Opportunity Fund is a leader in the national microfinance movement. "Leader" might be an understatement.
Around 400 institutions handle microloans in the United States. On average, they each give out about 45 each year.
In 2012 alone, Opportunity Fund provided a record 1,200 microloans. Amounts range from $2,500 to $100,000.
"What we do is invest in the dreams of entrepreneurs and students so they can build a business or go to college. To us, those are two proven pathways to economic mobility, to the chance of a better life," McShane explained.
Keeping It Growing
Since its inception 20 years ago, Opportunity Fund has helped 8,000 people turn their dreams into reality.
Maurice Brewster is just one example.
During the dot-com explosion, he left a 20-year career in sales management to start his own business. He and his wife, Rhonda, now run Mosaic Global Transportation, an international corporate transportation company.
"So we prayed about it and ended up three months later deciding that we were going to take the risk and go into entrepreneurship, and we haven't looked back," Brewster shared with CBN News.
A few years ago, business slowed down, and the company needed money to keep going and pay down some debt. Traditional banks were no help.
"After 30-plus years of doing business with one particular bank, I figured it'd be a shoe-in," Brewster said. "They proceeded to turn us down, and the reason for their turn-down was because of the fact that they didn't feel that we were bankable."
"They felt that because our assets base is vehicles -- very expensive vehicles by the way -- but they were rolling depreciable assets," he explained.
Not Too Young or Small
Other businesses might be refused a traditional loan because they are too young or too small.
Brewster heard about Opportunity Fund and found an opposite response.
"They looked at us a little bit differently. They peeled the onion back; they got information about our company and about my wife and I, owners of the company, who we are and what we're trying to accomplish," Brewster said. "And one thing led to another, and by the grace of God, they approved our first loan; we've got a couple loans with them now."
Brewster's company had around 20 employees when they first reached out to Opportunity Fund. Today, he said they're hiring around 60.
"That's close to 300 percent growth, and it couldn't have happened if we didn't have the support of microlending," Brewster said.
The day that CBN News visited Opportunity Fund, we discovered a man who needed $4,000 to take his catering business to the next level.
"Right now we're growing so rapidly, we're saying, 'yes,' to about five people a day, and it feels really good," McShane said. "But the relationship extends far beyond the capital to what we're able to come up with in terms of plans and what they're doing for their businesses."
A Hand Up
Opportunity Fund's goal is to increase financial access and provide microloans that also build a positive credit history.
The organization is a nonprofit because it thrives on donations from companies like Citibank.
"As Opportunity Fund grew, so did the partnership," said Vicki Joseph, Citibank's Northern California regional director for Citi community development.
"As you look at it in 2014, we now have product and program involvement with Opportunity Fund, but we also have board participation, and we have Citi volunteers that come out and support the organization and support the entrepreneurs through the programs," she said.
"As entrepreneurs grow from an idea to a full-fledged multi-million dollar enterprise, they're going to need different amounts of money. And sometimes, there is such a thing as too much, and a microloan fills the gap for anything below what a larger, traditional bank loan would be, as well as comes with a 'yes' when you might often hear a 'no,'" McShane said.
Opportunity Fund leaders say it's a chance everyone deserves -- a chance they call a "hand-up," not a hand-out.