Microfinance in the Rockbridge Area? An Exploration of Microfinance's Potential to Fight Poverty in the Washington and Lee Community

Abstract

Whether or not microfinance could efficiently help the poor of the Rockbridge Area is a complex question that begins with the poor. My paper explores the facet of poor citizens from the perspective of laborers. Not all the poor are capable of a normal full-time job, but many poor are stuck in a minimum wage job without a chance for a higher wage. These are the people microfinance could initially help. A brief description of the Rockbridge Area economy follows, mostly so the reader can flesh out an economic map of the area and understand its strengths and weaknesses. The section on the economy helps explore the underlying question of financing for small businesses. Small business cannot help the poor if they cannot get financing to start and operate. Expanding the credit market is microfinance's niche, but it is only necessary if there is a gap in the current credit market. The next section explores first-hand the Rockbridge Area credit market through conversations with a few local banks. Bankers outline their individual lending policies, which though different, share a common theme of conservative investments in established businesses. Though brief, the overview shows clearly the lack of a credit market for smaller ventures without a substantial existing supply of human or monetary capital. [From Introduction]