TechnoServe Highlighted in Report on Youth Entrepreneurship

September 13, 2011

How can financial institutions be persuaded to lend to young people who are trying to start a business? That is the central question addressed by a new report from Youth Business International (YBI), a global network of nonprofit organizations that focus on entrepreneurs between the ages of 18 and 35.


Entrepreneurs receive training in Honduras through Idea Tu Empresa, a TechnoServe business plan competition.

How can financial institutions be persuaded to lend to young people who are trying to start a business? That is the central question addressed by a new report from Youth Business International (YBI), a global network of nonprofit organizations that focus on entrepreneurs between the ages of 18 and 35.

The report, entitled Closing the Gap, shows how financial institutions and others are providing non-financial support, often in the form of mentoring and training, to facilitate the flow of capital to young entrepreneurs. “Banks and other financial institutions recognize that this integrated approach reduces the risk of lending to underserved demographics,” the report states. “The non-financial support acts as a substitute for collateral and other types of guarantee, closing the financing gap.”

Closing the Gap cites nine case studies, including TechnoServe’s experience with business plan competitions in Central America and South America. These competitions identify promising entrepreneurs and give them the tools to launch and grow successful businesses. As part of the programs, TechnoServe facilitates connections to a range of commercial lenders to help the entrepreneurs access financing.

As the report points out, these organizations recognize that the training, consulting and other non-financial support that TechnoServe provides significantly reduce the risk of lending to the fledgling businesses. A study of our 13 Central American business plan competitions showed that participants in the competitions outperformed non-participants in a number of categories, including sales growth, job creation and survival rates. The non-financial support was a critical factor in promoting the long-term success of these businesses.

Read the Closing the Gap report to learn more about global efforts to support young entrepreneurs.

 

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