As a welfare mother, Anna Combs Allen lived month-to-month and worried about being evicted - until she met with Michelle Richards Vasquez of the Ann Arbor Community Development Center.
AACDC arranged a microloan of $8,000 for Allen to open the Jackson Community Pre-school. Eight years later, Allen's pre-school employs 13 people, grosses more than $250,000 per year and allowed Allen to move into a three-story home and purchase two cars.
"Self employment can be and is the cure to dependency," Allen said Saturday at a conference on microloans at the Zion Lutheran Church. "I found the welfare experience to be degrading and shameful."
Microloans are small loans often financed by banks and the Small Business Administration. Many times, the microloans are coordinated by community groups such as AACDC, which has financed more than $700,000 in 10 years.
"It's a small solution that makes a big difference," said U.S. Rep. Lynn Rivers (D-Ann Arbor), who spoke at the forum. "Microcredit loans are part of the free-market enterprise that everyone in the country espouses support for."
Rivers referred to a woman in Senegal who received a microcredit loan of $400 for livestock and who now owns a business that supports herself and her four children.
While attending the Beijing Women's Conference in 1995, U.S. Rep. Debbie Stabenow (D-Lansing), learned that microcredit has become a popular way to bring women out of poverty in third-world countries.
"Women around the world were benefitting from very small loans," Stabenow said at the forum. "There is tremendous power in saying to someone, 'We're going to invest in your ideas.'"
Stabenow said support for microcredit should "cross partisan and ideological lines." She said conservatives who urge people to pull themselves up by their bootstraps should also support microcredit.
"Microcredit could give you the ability to get boots," Stabenow said. "The issue is not whether or not it will work, it is a question of political will."
Stabenow encouraged the audience of more than 75 people to write, e-mail and call representatives and senators to support the programs.
Rivers said microloans are important because the types of credit that banks often extend to the poor only further their economic despair.
"Poor people have always been viewed as credit risks for loans," Rivers said. "But (banks) are always willing to lend them consumer-type loans like Visa and Mastercard."
Rivers said the default rate on microcredit loans is less than 5 percent, which she said is much lower than the default rate on student loans.
Gayle Edgerton, a fashion designer who now owns a clothing mail-order service thanks to an AACDC-coordinated loan, said economic profits are not the only benefits of her business.
"It was more than an idea for me, it was a dream," Edgerton said.
Although microcredit loans are designed to aid the poor, Vasquez said they focus on aiding women and minorities. Rivers cited international statistics that show when women receive microcredit loans, they spend 92 percent of the loan on their children, and men receiving the same loans only spend 40 percent on their children.
Paul Brindle, a lobbyist for the anti-poverty lobby group RESULTS, urged the supporters to encourage their legislators to attend the first international Microcredit Summit in Washington, D.C., from Feb. 2-4. He said he also hopes President Clinton will join the conference.
"When he commits, world leaders will take the conference more seriously," Brindle said.
Vasquez said he is hopeful that Clinton will support microloans because of a speech the president gave at Eastern Michigan University last October in support of them.
JEANNIE SERVAAS/Daily
U.S. Rep. Debbie Stabenow (D-Lansing) spoke at the forum at the Zion Lutheran Church in support of microloans.