Micro Finance was started in developing countries to help address the problem of access to credit. Interestingly enough it also works in Australia for the same reasons.
From ProBono Australia
The research, prepared in conjunction with the Centre for Social Impact (CSI), shows the National Australia Bank’s (NAB) support of micro enterprise has generated more than $44 million in turnover and has created approximately 300 jobs over the past five years.
The report “Small is the new big: Measuring the impact of NAB Microenterprise Loans”, launched today, outlines the economic benefits of providing funding to businesses that would otherwise have no avenues to affordable credit.
The research found that NAB’s Microenterprise Loans program, which commenced in 2007, was successfully providing a pathway to employment with 30% of the survey recipients indicating they had moved from unemployment to operating an enterprise.
The research also found that almost 300 jobs nationally have been created stimulating an associated $2.5 million of benefit to community and government.
Les Hems, Director of Research, Centre for Social Impact, said that micro finance is often associated with developing countries but the research shows that a program like this can make a real and meaningful difference to Australians and the Australian economy.
“This is a prime example of the value of collaborative research and also the value of measuring and being able to demonstrate social impact, and we look forward to seeing where NAB, its partners and government take this program in the future,” Hems said.
The research also highlighted the pivotal role of partner organisations in supporting successful enterprises through business training and mentoring with 47 per cent of loan recipients stating they would not have survived without the loan; and 36 per cent said their enterprise would not have survived with the training program.
The research also found that there was a higher representation of single parents as loan recipients as well as higher levels of education with the majority having attained some form of tertiary education.
“We know that a healthy small business sector is crucial to the success of Australia’s economy and these results underline this with every dollar that is spent on NAB’s Microenterprise Loans program generating $1.22 of economic benefit.”
Since launching the program, nearly 1000 loans have been provided with recipients as diverse as an online skin care business, bush foods manufacturer, florists, circus performers and an organic underwear and sleepwear line for men.
Other key findings:
- 59 per cent of loan recipients found mainstream business finance ‘difficult to access’
- 24.6% of the surveyed loan recipients employ more than one employee (either part time or full time).
- 24 per cent had applied for a type of business finance that was not approved
- Currently a high proportion of loan recipients are in NSW (49 per cent), followed by Queensland
- The program was found to have generated $2.5 million in net economic value in the form of increased economic activity and reduced income support costs
- Program has supported $7.5million in increased tax benefits and $7.3 million in Centrelink savings.
Research was undertaken from October to December 2011 obtaining a sample of 313 recipients with economic modelling based on a cohort of 746 loan recipients.