Microloans Typically Used to Alleviate Poverty Abroad Surging in Silicon Valley
Monday, September 23, 2013
SAN JOSE, California — A daycare provider needed cribs and high chairs. A coffee truck needed a generator. A couple renting party supplies needed to move from a garage into a storefront.
When these Silicon Valley small businesses needed an influx of cash, and fast, they didn’t find help at a bank. They turned instead to a type of financing more commonly associated with buying a sewing machine for a Guatemalan tailor or a tractor for an African farmer.
Microlending, a decades old form of financing for the world’s poorest, is now booming in Silicon Valley. The region leads the country for microlending as a growing echelon of would-be businesspersons who can’t qualify for traditional bank loans meets money from cash-rich techies and firms, including eBay and Microsoft, who want to donate in innovative ways.
“Our clients are entrepreneurial people, but the mainstream financial system doesn’t work for them,” said Eric Weaver, founder and CEO of the San Jose, California,-based Opportunity Fund, which invested a record $7.6 million in loans to small businesses last year, creating about 1,900 jobs.
Beneficiaries range from dry cleaners to barbeque joints, and the lender is now believed to be the largest financer of food trucks in the state. “A food truck or a hot dog cart is a U.S. equivalent of a cow in a developing country,” he said. “It’s something a family can support itself with.”