Scaling Microlending in a Changed Economy

May 1, 2010  •

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Over the years, the U.S. microenterprise development field has grown. The most recent survey of the industry identified at least 250 programs offering microloans or other “microfinance” products. Although longitudinal data on a set of lenders that provided survey data in both 2002 and 2008 indicate that they have grown over time – with the aggregate number of loans made annually increasing by 21 percent and the value of loans disbursed annually growing by 68 percent – the size of most microlending programs remains small. In 2008, 139 microlenders who provided data made a median of 13 and mean of 44 loans.

In fact, much of the field’s growth in lending has been driven by a small number of lenders. These scaling lenders, which have worked systematically to scale their portfolios, have shown what others might achieve. As part of their work with the Scale Academy for Microenterprise Development, five of these lenders have been working to expand their microlending portfolios even more aggressively. Together they made 1,658 loans in FY 2009. This guide describes the key steps these lenders have taken in order to scale their lending and the implications of their experiences for funders interested in supporting greater scale.