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Lending Circles - Mission Asset Fund

MAF connects the informal social lending of immigrant communities to mainstream financial institutions.

Photo of Jared Bybee
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Mission Asset Fund builds on an informal lending and savings system prevalent in many immigrant communities: Lending Circles.  The 12 members of a lending circle each contribute a fixed amount each month to the group, and then collectively pick one member of the group to take the whole pot.  So if the 12 member decide they will contribute $100/mo, then the monthly pot is $1200.  Each member takes the monthly pot only once until every person has had a turn. This process has the effect of an interest free loan for the first person to take pot and an effective savings plan for the last.  Members  usually know each other well socially, and can even be related, so as to establish the trust necessary to enter into the arrangement.  A variety of immigrant communities have brought the informal practice to the US.

As I understand the organization, Mission Asset Fund builds on these informal financial arrangements by not only helping to organize the lending circles to reduce some of the risk, but also connecting the members' payment history with the major credit reporting agencies.  So while a year's worth of on-time payments then go to build a good credit history and eventually give access to cheap mainstream credit for bigger ticket items like a car or home. 

I find this approach compelling for both its recognition of the way that people live and interact in both life and finance. We lend to people we trust.  Yet the mainstream financial world has, for a variety of reasons, become detached from that reality.  This effort tries to reconnect the two. 

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