Legislation (H.R. 413) designed to help organizations that target low-income and disadvantaged entrepreneurs has been approved by Congress. The measure—known as the Program for Investments in Microentrepreneurs (PRIME) Act—was included in the final version of the Financial Services Modernization Act (P.L. 106-102), which was signed into law on November 12, 1999. The conference report was approved by both chambers on November 4.
The PRIME Act, sponsored by Rep. Bobby Rush (D-IL), will provide funds for training and technical assistance for microenterprise organizations, which give small loans for business start-up. The legislation calls on the Small Business Administration to award grants totaling $105 million over four years to nonprofit organizations and programs that make micro-enterprise loans.
Recipients of microloans—usually in amounts less than $15,000—often seek the loans because they are unable to qualify for credit from traditional lending organizations. In a study on microlending, the Aspen Institute reported that the small, nontraditional loans are most often sought by women. The five-year study of 405 participants in seven microenterprise programs found that 78 percent of those receiving loans were women.
Rep. Diana DeGette (D-CO), a cosponsor of H.R. 413, testified on the legislation before the House Banking and Financial Services Committee in September 1998. “I believe that microcredit creates jobs, generates income, and provides economic self-sufficiency, particularly for disadvantaged populations,” Rep. DeGette told the committee. She added that the legislation would give lending programs “the right tools to provide the support needed for long-term sustainability and success” among microentrepreneurs.
