Leveraging Community Resources to Assist Disabled Entrepreneurs
Lane MicroBusiness is a 501 (c) 3 nonprofit corporation that supports low-income individuals with business training, technical assistance, and capital. Lane MicroBusiness originally started as a program jointly managed by the Eugene Saturday Market, OUR Federal Credit Union, and Lane Community College. Since the programs inception, Lane MicroBusiness has grown to serve five Oregon counties and around 150 micro entrepreneurs per year.
Most of our work assisting people with disabilities is through the Capital Access Program, a national demonstration program of The Abilities Fund. We perform feasibility studies, assist in the preparation of business plans, and other consulting services as needed by Oregon Vocational Rehabilitation counselors. The Capital Access Program includes access to microloans specifically for people with disabilities to assist in the capitalization of a microbusiness. These services are valuable aids to Vocational Rehabilitation counselors who wish to determine whether a client has the motivation, personal readiness, and a business idea with sufficient merit to justify support through an Individual Employment Plan.
Microloans are good tools in assisting businesses get off the ground, but they are quite risky in the start-up phase for Vocational Rehabilitation clients. Term loans, the standard instrument of choice, require that the money invested in a microbusiness be returned shortly after the loan was made. Much needed capital to aid the business in the start-up phase is immediately taken out, increasing the risk that the business may not reach the break-even point.
A better tool for the initial capitalization of a microenterprise involving people with disabilities is an Individual Development Account (IDA). We have found that combining knowledge and skills training with IDA's to be one of the most powerful methods of stepping people with disabilities into business successfully.
By far the strongest component of the IDA program is the incentive it offers to the participant. Our program matches every dollar the participant saves with three dollars (3:1) with a maximum combined contribution of $5,000. A participant has between six months and three years to reach their savings goal and must use the funds for business related purchases. The accumulation of matched funds along with the prospect of investing the funds into the business without repayment has strong appeal to people with disabilities who have extremely limited abilities to take risks.
Further, our IDA program requires a three month pre-savings period, six month to three year actual savings period, a financial literary course, and the completion of a business plan. Each of these program elements serve to strengthen the participants business acumen. The feasibility study process allows participants the opportunity to learn the industry and market environment surrounding their proposed endeavor along with determining how the internal functions of the business will be carried out. The business plan serves as a market entry strategy and plan for the participant to follow to get the desired financial results. Combined with the accumulated savings and matched capital, the IDA program provides solid footing to build a microbusiness and propel a person with disabilities forward into the business world.
i Shawn Winkler-Rios is Executive Director of Lane MicroBusiness, an independent 501(c)(3) not for profit corporation. Mr. Winkler-Rios serves as Board Chair on the Board of Directors of the Oregon Microenterprise Network (OMEN), a statewide microenterprise association. Prior to joining Lane MicroBusiness Mr. Winkler-Rios was a Business Development Officer for Shorebank Enterprise Pacific and Program Manager for Umpqua CDC's Micro-Enterprise Development and Lending (MEDAL) Program. Last Year Mr. Winkler-Rios was awarded the Home-Based Business Advocate of the Year for 2004 for Oregon by the United States Small Business Administration.