MicroBusiness Development: 'percolate-up' economics.

• Author: Taylor, Mike
• Position: ON SMALL BIZ - MicroBusiness Development Corp.

WHENEVER TALK ABOUT COLORADO'S ECONOMY STARTS UP, IT'S usually not long before the scarcity of Colorado-based Fortune 500 companies comes up and along with it the argument that incentives are needed to lure these firms. Big corporations infuse jobs and money into the community, the reasoning goes, and that ultimately makes its way down the food chain.

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That's the trickle-down view. But what about the percolate-up effect--local businesses that start from nothing and become not only employers but also models, active blueprints, for future entrepreneurial dreamers?

The U.S. Small Business Administration estimates that small businesses account for 99 percent of all employers and roughly half of the country's workforce in the private sector. These are firms typically defined as having 500 or fewer employees.

But there also are businesses that are smaller than small--microbusinesses--typically defined as enterprises with five or fewer employees and capital needs of less than $35,000.

Creators of these tiny or as-yet unborn operations often have no capital, no business track record and no formal business plan anyplace but in their head. One ally they do have is the MicroBusiness Development Corp., an organization that has existed in Denver in one form or another for 13 years. MBD started out as Colorado Capital Initiatives in 1993. The organization later changed its name to PACE (People Assisting Community Entrepreneurs) and took on its current name in 2002 when it acquired Colorado Microcredit.

Since its inception, MBD has disbursed more than 988 business loans ranging from $10 to $50,000 and has created more than 550 jobs in Colorado communities. The organization received a big boost in late August when it announced it was awarded a $500,000 grant from the U.S. Treasury's Community Development Financial Institution Fund (CDFI). Of that, $402,000 is a Financial Assistance Award that will be used to expand MBD's loan capacity. The remaining $98,000 is a Technical Assistance Award that will be used to conduct a market analysis of opportunities for MBD's clients, develop an online loan application process, hire an additional loan advocate to handle the increased loan capability, pay for staff to attend a national conference, and establish a satellite office in Boulder County.

MBD's mission is to serve gaps in the market that traditional financial institutions are not adequately serving. Of MBD's clients, 74 percent are women...