American Express Co. introduced a new program yesterday that will help fund loans to the tiniest of the nation's companies.
The financial services company said it will funnel 1 percent of spending from a new small-business credit-card program to three organizations that lend money and provide training to microenterprise businesses - companies with fewer than five employees and annual capital needs of less than $35,000.
Yesterday's announcement highlighted Baker in a Bottle, a small business based in Mount Airy, as a successful example.
Just how many small enterprises the new program will help depends on the number of card holders, but American Express officials predict they will be able to dole out millions a year to the partnership organizations - ACCION, the Association for Enterprise Opportunity and Count Me In for Women's Economic Independence.
"We have some experience in this field, and we have a huge commitment to seeing microenterprise business grow throughout the United States," said Kerry D. Hatch, executive vice president and general manager for American Express small-business services.
Those who follow the growing microenterprise sector said the announcement is one of the biggest commitments by a large corporation to help micro-sized businesses that banks deem too risky or too small to bother with.
"I think it's a real win-win situation for everybody," said Elaine Edgcomb, director of the Aspen Institute's Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination.
"It's designed to allow small-business owners who are somewhat more successful to give back to those who are just starting on the journey to small-business success."
The microenterprise concept started in Bangladesh 30 years ago, and began to take hold in the United States in the late 1980s. Today, there are an estimated 700 programs that help as many as 100,000 microenterprises a year, according to the Aspen Institute.
As the businesses pay back their loans, the money goes into a loan pool to help other companies.
In Maryland, these tiny firms make up 65 percent of all businesses and play a significant role in the state's economy, advocates say.
"In terms of job creation and taxes being paid, microenterprises contribute tremendously to the economy," said Amanda Crook Zinn, a founding board member of the Microenterprise Council of Maryland. "They help fill up storefronts in neighborhoods and provide goods to communities, particularly poorer ones, where larger stores won't go."
Microenterprises also have been used to help mothers leave the welfare rolls and raise families out of poverty.
During yesterday's announcement, Baker in a Bottle was presented as an example of a micro-business that needed a financial boost.
Mothers Melissa Kesner and Christina Krause started selling jars of cookie mixes a year ago. When they went to banks to borrow a few thousand dollars, they were turned away.
"For a bank that's nothing," Kesner said. "They don't even want to talk to you unless you want $20,000 or $30,000."
The women got a $3,500 loan from Count Me In and have since expanded their product line to brownie, muffin, coffee and tea mixes. It helped them pay the fees to sell their mixes at craft shows and other places. They've applied to sell their products on the QVC television shopping network and in Cracker Barrel stores.
Count Me In officials say they can help more companies with the new American Express deal. The financial conglomerate will give the organizations their first payouts in a year.