Monica Valadez needed $5,000 for a better sewing machine and an upgraded workspace. Mostly, though, she needed a mentor.

Valadez, owner of Moniva Inspired Creations, was among 32 fall graduates from a popular community microfinance program offered by the University of Houston, about half of whom pitched their ideas to microfinance companies and other investors, competing for startup capital.

The judges were wowed by Valadez’s uncommon work. “This,” one told her, “is inspiring.”

Who knew there was a market for custom-designed clergy robes?

Although the judges didn’t immediately announce their decisions, Valadez and other graduates left the program with a built-in network of mentors. And that is the more lasting prize, said Saleha Khumawala, Robert Grinaker Professor of Accounting at UH’s Bauer College of Business.

Most of the would-be entrepreneurs already have an idea for a business when they enroll in the microfinance program, ranging from lawn services to catering companies and medical billing firms. And while many think the access to loans and the laptop computers given to graduates by sponsor Capital One Bank are the biggest benefit, Khumawala sees something else.

It’s really about knowledge, she explains: financial literacy and the business plans that Bauer graduate students help these participants create for their fledgling companies.

“At the end of the day, money is paper,” she said. “Education is the key to real empowerment.”

That’s always been at the heart of the UH microfinance program, the thing that sets it apart from other such programs.

The concept of microfinance has been around since the 1970s, when Bangladeshi economist and banker Muhammad Yunus pioneered the concept of making very small loans to villagers so they could start businesses. Students at a number of U.S. university campuses have formed clubs to make microloans to entrepreneurs in developing nations; a student club at UH briefly did the same.

But Khumawala said the need in Houston is huge — she estimates about 9 percent of Houstonians live on less than $2 a day — and a local-only emphasis allows UH students not only to work with local nonprofits and microfinance organizations but also to learn about real-world business challenges.

There is nothing like the UH program in the United States, Khumawala said, although some universities now offer mentoring programs for small businesses, and a few have even come here to study the Houston program.

Many people say the key to the UH program’s success lies firmly with its founder.

“Saleha Khumawala was a social entrepreneur before they invented the term,” said Richard Scamell, an associate dean at Bauer. “She is someone who sees a problem and wants to make things better.”

Professor Saleha Khumawala, founder of the microfinance program at the C. T. Bauer College of Business

She knew immediately, for instance, that traditional microfinance — a $50 or $100 loan — wouldn’t work in a major U.S. city like Houston. So, working with partners, including Neighborhood Centers, Capital One Bank, Wells Fargo Bank and The Simmons Foundation, she created something different, starting with the idea of loans that may be small by conventional standards but are 100 times larger than the usual microloan.

The real proof of the program’s success is scattered across the city, in places such as the Sweet Luxuries Bakery.

“A year ago, I never would have dreamed my business would have grown in this capacity,” said owner Heather Davis. “It has been an amazing year.”

Davis, a UH alum, was a longtime Houston Independent School District teacher with a dream of owning her own bakery. For years, she made treats for coworkers but planned on retiring as a teacher or school counselor, pursuing baking on the side.

Then things began to fall into place. She discovered Neighborhood Centers in Independence Heights, an agency offering a range of community empowerment programs, including renting commercial kitchens by the hour. Through the agency, she learned about the UH microfinance program and signed up for the fall 2013 session.

She already had the dream and the name for her business. The class gave her a business plan, while also conveying the discipline required to run a successful business.

Davis absorbed the lessons. She grew her business steadily, marketing via the Internet and social media, as well as through face-to-face contact. She moved into Kaffeine Coffee on Alameda Road this spring; her products are also in a number of retail outlets, including her favorite department store, Nordstrom.

Naturally, that was a thrill, but she wasn’t living large. “You have to know how to manage yourself before you can manage your business,” she said. “I learned how to better manage my personal finances through the UH microfinance program, in order to continue sustaining self-employment.”

It’s been worth it, though, and she couldn’t stop smiling as she talked to the 2014 graduates.

“It’s a dream come true,” she said. “I have an amazing family of mentors, and Dr. Khumawala is the mother of my business.”

Update, June 2017

After the publication of this story, Khumawala’s microfinance program was renamed SURE™, or Stimulating Urban Renewal through Entrepreneurship. The goal of teaching community members the fundamentals of business and entrepreneurship was unchanged.