This document examines microenterprise development as an employment option for Temporary Assistance for Needy Families (TANF) recipients. The document begins with a brief discussion of the feasibility of self-employment as an option for TANF recipients, particularly in a slow economy. The next section answers policy questions pertaining to the following issues: (1) ways state policies regarding TANF receipt influence microenterprise development; (2) funding sources available to support microenterprise development and training (TANF funds, maintenance-of-effort funds, federal welfare-to-work funds, community development block grant funds, and funds available from the Small Business Administration through the Program for Investment in Microentrepreneurs Act); (3) the kinds of businesses that are best suited to be operated as microenterprises; (4) ways localities can support the development of new enterprises; and (5) skills and training needed to successfully operate a small business (business management and administrative skills, entrepreneurial skills, financial literacy and marketing and market access skills; self-motivation, and technical skills). Pertinent research findings are presented along with profiles of innovative programs in Alabama, Arkansas, California, Illinois, Maryland, Massachusetts, Nebraska, and New York. Concluding the document are the addresses (including World Wide Web addresses, when available) of 12 resource contacts and sources for 19 pertinent publications. (MN)