The Unbankables

If you lend small amounts of money to the working poor—people with no assets, no credit, no savings—can their American dreams come true?
Harold Washington, the owner and sole employee of King Harold Computer World, at his apartment in Carrollton.
Photograph by O. Lovett

On Sunday, August 28, 2005, Harold Washington was living in New Orleans, supporting himself as a substance abuse counselor and repairing his friends’ computers in his spare time. On Monday, Hurricane Katrina changed all that. The next day, Washington set out from the Ninth Ward, wading through waist-deep water to a house where his wife, their two-year-old son, and her father were staying. They made their way in boats to a bridge, where they were evacuated by Black Hawk helicopter and eventually put on a bus bound for Pineville, Louisiana. Washington had left New Orleans with a pair of shorts, a couple of T-shirts, a cell phone, his wedding band, and an ID. For the next few weeks he and his family bounced around, finally settling in Dallas, where a relative lived. Washington had visited friends in the city seven years before and remembered seeing a lot of want ads for computer repairmen. It seemed like a good place to start over.

He went to the Texas Workforce Commission, where he was asked what kind of work he wanted to do. Fix computers, he said. The TWC got him a job at a technical school, where he also took classes to get his A+ certification. The woman who hired him ran her own computer-repair-and-sales business and told Washington that, with his experience, he could do it too. Washington was already working on the computers of family and friends, but now he started buying and selling PCs too. In April 2006 he filed papers with the county and made his business official. The name came naturally. “In New Orleans, I called myself King Harold, because it’s my spiritual belief that I’m a king and that my father was a king,” he told me, in his slow Louisiana drawl. “So, King Harold Computer World, where I’m the king of good service.”

In his first year as a small-business owner, Washington, who is 42, made just $5,000. Fortunately, by August 2006, he had left the technical school for a better-paying job at Pitney Bowes, repairing and maintaining mail sorters. On a typical day, he works for Pitney Bowes from eight to four-thirty. Then he comes home and works for King Harold until around ten, though sometimes he’s up in the wee hours of the morning, loading software onto hard drives. The business earns enough to keep him at it but not enough for him to quit his day job.

This past spring, a friend told Washington about a Dallas nonprofit called the PLAN Fund that offers classes and makes small loans to people trying to start businesses without much experience. Since it began, in 1997, the PLAN Fund has made 461 small-business loans. The key word here is “small.” The theory behind the PLAN Fund is known as microcredit: lending tiny but crucial amounts of money to poor people who want to start their own businesses—in essence, teaching them to fish rather than giving them fish. Microcredit, or microfinance, was developed thirty years ago by Muhammad Yunus, a Bangladeshi economics professor who won the 2006 Nobel Peace Prize. In the Third World, Yunus’s work with the Grameen Bank, a microcredit lending institution he founded in 1977, has lifted millions from the gutter. In the First World, his theory has been less quick to catch on. Currently, Dallas and Harlem are the only two places in America with Grameen-affiliated microcredit groups. Luckily for Washington, he wound up in one of them.

Washington wasn’t sure if he wanted a loan, but he needed help writing a business plan. Plus, he felt he needed a mentor, someone to help him navigate the obstacles of running a new business in a new city. And so in May he joined seven other hopeful entrepreneurs at the Multi-Ethnic Education and Economic Development ( MEED) Center, just east of downtown Dallas, for their first PLAN Fund class. One woman had her own business as a fashion consultant; another had recently launched Epitome, a Christian magazine (“Not gossip, just Gospel”). There was a former math teacher who wanted to start a tax-and-financial-services company and a man who was trying to juggle his three start-ups—a painting studio, an organization that connects African Americans to their heritage, and something to do with distressed houses.

The MEED Center is home to various community organizations and hosts classes in things like English, accounting, and résumé writing; on the other side of the main room, a computer class was just finishing up. A thunderstorm raged outside and the roof leaked a steady drip, feeding a growing stain on the gray carpet. A Coke machine rattled so loud I thought it would explode. The PLAN Fund students sat down around a table, each with a notebook open and a pen or pencil in hand.

Class began with a presentation from Sam Hills, the PLAN Fund’s most successful graduate. In 2003 he launched a medical equipment company that now employs five people and grosses $500,000 annually. “I’m Sam Hills,” he proclaimed, “president and CEO of S&A Oxygen Express, where your needs are expressed!” Hills is regularly called on to give the same stirring speech to incoming students.

I’ll be the first one to tell you that opening up your own business is not an easy task, but it can be done,” he said, patrolling his five feet of ground at the front of the classroom, left hand in pocket, right hand cutting through the air. “How many of you know where the comptroller’s office is?” Three people raised their hands. “How many of you know where the records office is?” Six responded. “You got to know these things. How many of you talk to someone every day about your business?” A few hands went up. “That’s good, because if you don’t talk to people about your business, how the heck are they gonna know what you do? It doesn’t matter where you are. Go to the movies, talk to the folks. Go to church, talk to the folks. I

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