Summarizes early findings about the provision of microgrants to dislocated workers in the Self-Employment Training program in California, Illinois, Oregon, and Ohio, including an overview of the percentage of participants who received a seed capital microgrant, the timing of funding requests, the primary industries of participants’ businesses, and the most common uses of the microgrant.

“The Self-Employment Training pilot program is testing strategies to support dislocated workers who want to start their own businesses. Unemployed and underemployed workers who propose businesses in their fields of expertise are eligible” (p.1).

“The seed capital microgrant is a key part of the Self-Employment Training (SET) demonstration. SET participants can apply for a microgrant of $1,000—intended to cover some of the costs of starting a business—if they meet certain requirements. Namely, they must engage satisfactorily in the SET program (as assessed by the microenterprise provider), must have registered their business, and must have developed a comprehensive and satisfactory business plan. Microgrants can be used for start-up expenses, such as licenses, equipment, or supplies, but not for ongoing operational expenses, such as salary or rent, or for personal expenses” (p.1).

SET programs are being evaluated using a Random Control Trial whose findings are not yet available.  “This brief is one of five on emerging lessons from the pilot program” (p.1). “This brief presents early findings on the implementation of the seed capital microgrants from the program’s start in July 2013, through April 2015. [The authors’] assessment draws on data from the SET management information system (MIS), site visits, calls with providers, and case study interviews with 12 SET participants. Because the SET program [was] still ongoing [at the time of writing], the qualitative findings in this brief are preliminary and based on a partial sample of program participants....The study’s final report…will include data from a follow-up survey with the full sample of SET participants, causal results from the impact assessment of the program, and updated implementation results” (p.1).

Full publication title: What Does $1,000 in Seed Capital Buy? Emerging Lessons from the SET Program’s Offer of Microgrants for Business Start-Ups

(Abstractor: Author and Website Staff)

Major Findings & Recommendations

“Emerging Lessons from [the] Study of Seed Capital Microgrants: • An amount as low as $1,000 can help participants get their business started. Most of the SET microenterprise providers and all 12 participants interviewed reported that the microgrant could be helpful to those starting their businesses. Microgrant recipients asked for close to the full amount of funding available, on average. Nonetheless, seed capital ‘take-up’ has been limited: only 38 percent of the participants assigned to a microenterprise provider for at least eight months have received seed capital. • Most microgrant recipients used the $1,000 to invest in electronics, supplies, and marketing materials that could help them bring in and serve customers. The highest amounts of both average and total funding requested were for electronics and supplies. Electronics, supplies, and marketing materials were also most frequently requested. • Almost 40 percent of seed capital recipients proposed starting businesses in professional, scientific, and technical service industries. Microenterprise providers and participants indicated that these industries may have lower barriers to entry because they allow people to operate like consultants, using their existing networks, without needing storefronts. • It takes about six months for SET participants to meet key business development milestones required for microgrant eligibility. In three of the four SET study sites, the average length of time between participants joining the program and making their first request was six to seven months. • Counseling and careful review of applications may be important. Over 90 percent of SET advisors and over 70 percent of participants reported that counseling helped participants make the most out of the microgrant” (p.1). (Abstractor: Author)