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Office of the Press Secretary

For Immediate Release February 5, 1999
                           PRESIDENT CLINTON:                           

                            February 5, 1999                            

Today, President Clinton Will Unveil the Administration's Domestic and International Microenterprise Agenda for FY2000 and Will Honor Recipients of the 1998 Presidential Awards for Excellence in Microenterprise Development. Long a passionate interest of both President Clinton and the First Lady, microenterprise has proven a powerful tool for empowering people left out of the economic mainstream, providing them the skills and credit they need to improve their own lives. President Clinton's FY2000 budget includes a 159-percent increase in support for domestic microenterprise programs, with a significant strengthening of the Administration's commitment for training and technical assistance -- an essential component on fully delivering the microenterprise promise. President Clinton's budget also continues to ensure that America provides global leadership on microenterprise through the U.S. Agency for International Development (USAID).

What Is Microenterprise? Microenterprise development programs provide access to capital, other financial services, and training to those traditionally bypassed by the mainstream financial sector, such as the poor, women, minorities, and those in areas of economic downturn. With these resources, these people can start and/or build businesses, creating jobs and opportunity. Recognized for the past twenty-five years as a powerful tool for development in poorer countries, microenterprise has been increasingly successful in providing opportunities in the United States. In this country, a microenterprise is generally defined as a business with five or fewer employees -- at least one of whom is the owner -- and that has a demand for small amounts of credit (less than $25,000).

A 159-Percent Increase in Overall Budget To Support Microenterprise At Home. President Clinton's domestic microenterprise agenda recognizes that in the new economy, simply providing credit to microentrepreneurs is often not enough. Microentrepreneurs often need training and mentoring to help them succeed, and microenterprise organizations need technical assistance to build their capacity and enhance their effectiveness. This year, the Administration seeks to dramatically increase its support for these critical services, nearly tripling funding for training and technical assistance. This year's budget also focuses on leveraging new resources through Individual Development Accounts, and on making microenterprise and other resources more widely available through the Small Business Administration's (SBA) One-Stop Capital Shops. Specifically, the President's plan includes:

     $15 Million To Support The Program for Investments in
     Microentrepreneurs (PRIME) Act.  The bipartisan PRIME Act --
     introduced by Senators Kennedy and Domenici and Representatives 
     Rush, Leach and LaFalce -- authorizes the Community Development 
     Financial Institutions (CDFI) Fund to establish a microenterprise 
     technical assistance and capacity building program to award grants 
     on a competitive basis to microenterprise development 
     organizations and programs that focus on low-income entrepreneurs. 
     PRIME will also sponsor research on the most innovative and 
     successful ways of encouraging new businesses and enabling them to 
     succeed.  PRIME, like all other CDFI programs, will leverage 
     non-federal funding with federal dollars by requiring that all 
     assistance be matched.  The PRIME Act authorizes an appropriation 
     level of $105 million over four years, starting with $15 million 
     in FY2000.  The President's FY2000 budget includes $15 million for 
     PRIME within CDFI, which the President proposes to expand from $95 
     million in FY99 to $125 million in FY2000.

     Double Support For Technical Assistance in SBA Microloan Program.  
     Key to the success of the SBA Microloan Program has been its 
     capacity to link loans to entrepreneurs with the provision of 
     training and technical assistance.  The Administration's FY 2000 
     budget seeks to double funds devoted to training and technical 
     assistance from $16 million in FY99 to $32 million in FY2000.

     Double Support for SBA Lending To Leverage Over $75 Million In New
     Micro-Loans.  The SBA Microloan program makes loans to microfinance
     development organizations, which in turn re-lend the funds to small
     businesses.  Over the last seven years, well over 100 organizations
     have participated in the program, making over $78 million in loans 
     to more than 7,800 microentrepreneurs.  The average loan to a 
     business is roughly $10,000, and the SBA has not incurred a single 
     loss in that time period.  The President's FY2000 budget doubles 
     support for the SBA Microloan Program, from $3 million in FY99 to 
     $6 million in FY2000 -- which should help leverage over $75 
     million in new loans.

     Double Funding for Individual Development Accounts (IDAs). Since 
     1992, President Clinton has supported the creation of Individual 
     Development Accounts (IDAs) to empower lower-income individuals 
     to start a new business, invest in a first home, or save for 
     post-secondary education.  Low-income families will receive 
     matching contributions of between $1 and $8 for each dollar they 
     save in an IDA.  Last year, President Clinton signed legislation 
     authorizing IDAs.  The President's FY2000 budget doubles support 
     for IDAs, increasing the IDA budget from $10 million in FY99 to 
     $20 million in FY2000.

     Triple Funding for SBA's One-Stop Capital Shop Initiative.  
     One-Stop Capital Shops offer financial and training/mentoring 
     services and products -- microenterprise development, personal 
     finance, even credit repair -- in Empowerment Zones to communities 
     and individuals often passed-over by economic booms.  SBA is 
     committed to providing a microloan presence in every One-Stop 
     Capital Shop, and will provide office space at each Shop for 
     microloan intermediaries.  The President's FY2000 budget proposes 
     to triple funding for the One-Stop Capital Shop Initiative, from 
     $3.1 million in FY99 to $10 million in FY2000.

|                                                                   |
|               PRESIDENT CLINTON'S FY2000 BUDGET:                  |
|            A 159-PERCENT INCREASE IN MICROENTERPRISE              |   
|                                                                   |
|                        |             |             |              |
|                        |  FY1999     |   FY2000    |   Percent    |
|                        |             |             |   Increase   | 
|                        |             |             |              |
|                        |             |             |              |
| PRIME Act              |    --       | $15 million |     n.a.     |
|                        |             |             |              |
|                        |             |             |              |
|                        |             |             |              |
| SBA Training           |             |             |              |
| and Technical          | $16 million | $32 million |   100%       |
| Assistance             |             |             |              |              |
|                        |             |             |              |
| SBA Lending            |  $3 million |  $6 million |   100%       |
|                        |             |             |              | 
|                        |             |             |              |
|                        |             |             |              |   
| Individual Development |             |             |              |
| Accounts               | $10 million | $20 million |   100%       |
|                        |             |             |              | 
|                        |             |             |              |
| SBA One-Stop Capital   |$3.1 million | $10 million |   223%       |
| Shop                   |             |             |              |
|                        |             |             |              |
|                        |             |             |              |
| TOTAL                  |$32.1 million| $83 million |   159%       |
|                        |             |             |              | 
|                        |             |             |              |

Focus on Countries in Crisis and Extending Microenterprise's International Reach. Internationally, microenterprise has proven to be a compelling component of effective development strategies, contributing substantially to a rise in the standard of living for millions of families and providing a solid base for robust small business sectors. Early in his Administration, the President launched the USAID Microenterprise Initiative; today USAID is the world's leading donor in microenterprise development (averaging $135 million per year over the past three years). This year, the Administration will continue to provide global leadership through USAID, focusing especially on the unique challenges presented by the global economic crisis and the ravages of Hurricane Mitch, and on exploring new ways of leveraging support from multi-lateral institutions for microenterprise.

     Increased Funding for Countries in Crisis.  In response to the
     financial and natural crises that have afflicted so many this year,
     USAID and the Administration have proposed several programs to 
     assist microenterprise intermediaries in rebuilding and expanding 
     capacity, and in providing additional liquidity to programs in 
     need.  These include:

          An additional $7 million in USAID's FY2000 budget for
          microenterprise to speed economic recovery for countries hit 
          hard by the global financial crisis;

          The First Lady, during her visit to Central America in 
          November, announced a $17 million Microenterprise Recovery 
          Fund for those Central American countries most affected by 
          Hurricane Mitch. The Fund will include $5 million from USAID 
          (which has already been approved), and $12 million from the 
          Inter-American Development Bank Multilateral Investment Fund;

          A further and substantial commitment of funds and technical
          assistance for microenterprise support will be a part of a
          supplemental package of relief for Hurricane Mitch.  The
          Administration is currently working with a bipartisan group 
          of Congressional leaders on the final details of that plan.

     Leveraging International Resources.  The Administration has played 
     a lead role in the formation of the Consultative Group to Assist 
     the Poorest (CGAP), which -- under World Bank auspices -- 
     coordinates bi-lateral and multi-lateral donors who now 
     collectively provide more than $500 million in support for 
     microenterprise worldwide.  This year, we will work with the World 
     Bank and other Multilateral Development Banks (MDBs) to increase 
     the portion of their lending dedicated to building microenterprise 
     retail and wholesale intermediaries worldwide and, where possible, 
     to channel those resources directly to those intermediaries.

     Developing Conducive Regulatory Environments.  Access to credit 
     for microentrepreneurs in developing countries is quite often 
     limited by banking and other regulations that were not designed to 
     accommodate the unique needs of microenterprise lending 
     institutions.  To address this constraint, the Treasury Department 
     and USAID will work with the IMF, MDBs and microfinance 
     institutions to provide technical and other assistance to central 
     banks and other regulators in less-developed nations to develop 
     legislative and regulatory frameworks that support the unique 
     needs of microenterprise.