Bizfare: Loans Help Poor Entrepreneurs

Associated Press

A bank would never risk a dime on Rosie Moore, but a pilot federal program is loaning thousands of dollars to her and other welfare recipients who want to start their own businesses.

“I’ve always worked for someone else. I’d like to become my own boss,” says the mother of two.

She’s getting her chance under a pilot Self-Employment Initiative program in which Mississippi, Iowa, Michigan, Minnesota and New Jersey are participating.

Worked in Collections


Moore, of Canton, says she worked for seven years in a bank’s collection department and a year for a private collection agency.

She wanted to open her own collection agency but is supported by the Welfare Department’s Aid to Families With Dependent Children program and until now couldn’t afford to start her own business.

The Self-Employment Initiative will give Moore a chance to make her dream come true. And other women in the two pilot projects in Canton and Meridian hope to turn skills learned at home into profitable commercial enterprises such as house cleaning, child care and catering.

Each participant will be allowed to borrow up to $5,000.


“The real key to the project is not the loan but the training,” said John Jones, director of the pilot project in Meridian.

Workshops Conducted

Meridian Junior College is providing business training, and the Canton project has contracted with Bill Cooley of Systems Consultants in Jackson to provide six months of morning workshops covering everything from marketing to legal, tax and insurance needs of small businesses.

Cooley said he helps each participant draw up a detailed business plan before they present their loan application to the program’s advisory board, which includes local business owners as well as welfare and social service representatives.

Under a special waiver, participants will be allowed to retain their welfare benefits for one year before they must begin paying back their loan and living off their businesses, explained Glenda Crump, project director in Canton.

Aurelia Jones-Smith, project coordinator for the Governor’s Office of Federal-State Programs, said her office chose to use some of its federal dollars for the Self-Employment Initiative instead of other welfare programs because Gov. Ray Mabus wanted to “provide another option.”

But his state welfare commissioner, Thomas Brittain, has reservations.

Frequent Failure Cited


“My first concern is that it’s an awful lot of money for such a few (welfare) clients,” Brittain said. “Second, private ventures even under the best of circumstances often fail. And third, there are probably things we could do to get these same people other jobs.”

Jones-Smith says of skeptics: “Are they suggesting that AFDC recipients should work only for others and not for themselves? That implies the only option that should be available to these people is to work for somebody else, and I don’t agree with that.”

The Governor’s Office of Federal-State Programs has funneled about $70,000 each into Mississippi’s two pilot projects, with 10 participants in Canton and 22 in Meridian.

The $70,000 is almost all federal funding and covers the projects’ operations for 18 months. Canton started its program in January and Meridian began in December. Both programs also are seeking private donations to bolster their revolving loan funds. Crump said the Levi Strauss Foundation has given the Canton project a $49,000 grant.

Crump said about 40 Madison County welfare recipients applied for the Canton project; 10 participants were selected.

Desire Considered

“We looked at their debt level, because if they’re overextended we know that once they start their business a lot of their money will probably have to go back into some of those debts that they acquired,” she said. “We looked at their (business) idea to see how viable it is for this area, and we also looked at their desire and commitment to becoming self-employed.”

Program workers say they expect the new business owners to be able to repay their loans, but know most probably will never become wealthy.


“We’re starting off with a projected gross income between $12,000 to $15,000 annually,” Crump said “It’s not a lot, but it would be enough to let them leave welfare and be self-sufficient.”