Three years ago, Loretta Nguyen took a business training class and scraped together several thousand dollars to start silk screening T-shirts and hoodies that she initially sold at street fairs and over the Web.

Recently Nguyen moved her firm, Fiftyseven-thirtythree, into a storefront on Piedmont Avenue in Oakland, illustrating how microlending and training programs deliver great bang-per-buck when it comes to job creation, advocates say.

"I learned so much about how to put my plan into action," said Nguyen, 33, who took a training course through the Women's Initiative for Self-Employment, a Bay Area nonprofit that is one of a network of microfinance organizations that help people start businesses.

The Women's Initiative recently looked back at 2,600 clients who took 10 or more hours of business training between 2004 and 2008, and discovered that they had created 2,244 jobs - for themselves or for others - at a cost of a little over $4,000 per job.

Hard work

About 15 percent of Women's Initiative clients also take out small loans in addition to training, but many graduates, like Nguyen, choose businesses that can grow through hard work.

At a time when job creation is a national priority, microfinance organizations are being recognized for the efficiency with which they channel expertise and funds toward individuals with the self-discipline to become self-employed.

"We've been around for 20 or 30 years, but I think our time has emerged," said Claudia Viek, chief executive of the California Association for Micro Enterprise Opportunity, the San Francisco umbrella group representing 92 training and financing organizations statewide.

Viek said that for every 100 clients who take entrepreneurial training classes, a little over half actually start businesses and, of these, 80 percent make it through the first three to five years.

The U.S. microfinance movement earned kudos in March when the Aspen Institute, a think tank in Washington, released a study of 240 clients who had received loans and training from 35 groups nationwide between 2002 and 2007.

Study coordinator Elaine Edgcomb said Aspen found that the average client more than doubled their revenue - from $103,000 to $243,000 - while the average number of employees went from 2.1 to 5.6 within five years.

Many microfinance groups are also federally designated community development finance institutions - not banks, but nonprofit organizations chartered to lend money to borrowers without enough profit to support bank lending, such as making small-business loans of less than $50,000.

Eric Weaver, chief executive of Opportunity Fund, a community development lender in San Jose, said microfinance groups have been hit hard by the recession. Banks - which enjoy federal incentives to work with community development lenders - have been more reluctant to put money into risky loans to new businesses, at a time when most firms are struggling to stay afloat.

"We had defaults in the high teens," Weaver said. "We've never been there before."

Capital infusion

At this crucial juncture, Bank of America has stepped in to give microfinance lenders a capital infusion.

Dan Letendre, who runs Bank of America's nationwide community development lending operation from his office in San Francisco, said eligible microlenders can borrow extremely cheap money from the Small Business Administration and, in rural areas, from the U.S. Department of Agriculture. They can use these federal funds to make microloans and provide the training that can make a big difference in outcomes.

But to access that federal cash, many microlenders must post a 15 percent loss reserve - setting aside $150,000 of their own funds to borrow $1 million from the feds.

Realizing that microlenders were leaving badly needed funds unused because they couldn't meet this requirement, Bank of America is awarding up to $10 million in grants that qualified groups can use as a loss reserve. Letendre said the grants will enable microlenders to borrow and loan up to $100 million from the federal agencies.

'Big help'

"This is going to be a big help," said Jacob Singer, chief executive of Oakland Business Development Corp., which made about 60 loans last year averaging $33,000.

The impact of this microfinance and training movement is evidenced by the success of entrepreneurs like Nguyen, who now works with her boyfriend and two part-time employees who do sales and sewing.

Bank of America estimates that its $10 million grant could end up drawing enough money into microfinancing groups to help roughly 8,000 businesses create as many as 28,000 jobs over the next several years.