Bundled Credit and Business Training
Microentrepreneurs may possess business knowledge but lack liquidity to purchase inventory or capital goods, or conversely, receive microloans without the technical management capacity to deploy funds productively. Combining cash loans with traditional classroom training attempts to resolve both liquidity and human capital constraints simultaneously.
Picture this
Bundling credit and training is like giving a driver both a high-performance vehicle and driving lessons at the same time. While having fuel and steering skills simultaneously should accelerate progress, the capital boost often provides the majority of the forward momentum, while gender-based social barriers can still prevent certain drivers from leaving the garage.
What the evidence says
Bundled programs increased short-run profits, but gains were frequently driven entirely by the financial assistance component rather than training additionality; in Uganda, male entrepreneurs receiving loans and training gained 54% higher profits, whereas female profits remained completely unchanged.
- Who
- Human male and female microentrepreneurs across 7 evaluation settings, including a study in Uganda evaluating loans of US$180–$220 alongside classroom training.
- How
- Randomized Controlled Trials (RCTs) comparing training alone, capital alone, and combined capital-plus-training programs.
What to do
Unbundle capital grants from mandatory classroom training requirements unless the business training curriculum is explicitly adapted to address the social and domestic constraints of the target entrepreneurs.
From the source
"Male entrepreneurs reported 54 percent higher profits, but the profits of female microentrepreneurs did not change."
Teaching business skills to support microentrepreneurs.pdf