With microfinance programs in the United States in their third decade of operations and in light of economics changes, it is time to take a fresh look at the challenges and opportunities. Since its inception in the U.S. environment, microlending has been viewed variously as a strategy to assist in asset accumulation, poverty alleviation, community and economic development, empowerment of disadvantaged populations, and to improve access to credit with target populations as diverse as its purposes. The 362 microlenders identified in the Aspen Institute’s most recent count represent a highly fragmented group, with capital sources ranging from the United States Small Business Administration (SBA) to private foundations and individual donors. U.S.  programs and their supporters have found microfinance scale and sustainability to be elusive.
This paper addresses the current state of U.S. microfinance including challenges such as under and over promising, scale, and sustainability and the questions raised by these challenges. It then examines microcredit from the microentrepreneur’s perspective using research conducted on U.S. Microfinance Institutions (MFIs) and introduces the behavioral economics perspective on the issues. Then, the paper suggests policy and program options and identifies work in progress and proposed research that appears promising.