Chapter 17
Microfinance
Essential Idea: Tap into the Growing Global Popularity of Microloans to Get the Funding You Need
Ryan Fochler had a dream. An animal lover by nature and entrepreneur at heart, Fochler was stuck in a corporate computer job back in the early 2000s. His dream was to start his own animal-related business. And so he did. By using savings and a home-equity line of credit (this peculiar funding mechanism was widely available back at this time when people apparently had something called “equity” in their homes). Fochler ventured out on his own to start a simple yet profitable dog-walking business.
The business grew steadily and by late 2007, Fochler had decided to expand. He got a loan from his bank and began to convert an old 7,000–square-foot pharmacy into a full-fledged pet day care and retail outlet. This was in mid-2008. And then it hit—the financial earthquake, just as he was in mid-construction. Almost immediately the bank froze his credit line. What was Ryan Fochler going to do?
Tap into microfinance, that's what.
Microfinance is an idea that is usually thought of in conjunction with third-world economies. Groups like Kiva.org and the Grameen Bank of Bangladesh lend small sums of money—microloans—to needy, would-be entrepreneurs. A typical microloan might be for, say, $100 to buy two cows. Microloans have not generally been considered an option when discussing entrepreneurship in a Western economic setting.
Until now.
These days, microfinance is adapting ...
