Lending Circles

Esther WongExecutive Director

Chinese American Service League

Money

• Why do we need money For daily living For children’s higher education For investment and entrepreneurship For luxury, e.g. purchasing cars For purchase of real estate The last four items need a lump sum of money: Capital

• How do we get money Hard work Inheritance, not everyone has a rich uncle Savings and investment Loans from institutions – requires good credit Social lending: Borrow from family and friends

Traditional Social Lending

• ROSCAs: Rotating Savings and Credit Associations. Africa: Susus Korea: Kye Japanese: Tanomeshi China: Lun Hui Mexico: Tandas

• A traditional lending circle in the Chinese community Consists of a head (organizer) and several members.  “Association of righteousness”

MAF (Mission Asset Fund) Lending Circles• An innovative program started in 2008 that weaves a

culturally relevant age-old social lending model that helps participants build credit free of charge through a financial education framework.

• Converts social loans• Partnership with Citi• Monthly payments activities recorded and reported to the

Credit Bureau • MAF sponsored lending circles are zero-fee, zero-interest,

credit building social loans.

Chinese American Service League (CASL)• Multiservice social service agency in Chinatown Chicago for

35 years

• A nurturing hub within the heart of Chinatown, CASL connects families and individuals of all ages with the vital support they need to flourish physically, economically, mentally and socially, enabling them to thrive and contribute to the greater Chicago community.

• With an annual budget of $13 Million, 500 full time and part-time multi-lingual staff, CASL addresses special needs of new immigrants:

language, unfamiliar with US banking system or services provided by banks unbanked, mostly use cash, no credit history, shut out of affordable financial

products, difficulty of building financial assets

Pilot Project – National CAPACD and MAF

• Main Goal: integrate financial education training, individual coaching, improved saving habits to build credit

Four agencies involved across the country: LA, Houston, Chicago and New York.

CASL is HUD certified. CASL started the program in 2014.

CASL’s efforts in the project include:

CASL involved more than 100 individuals on financial education, provided one-on-one coaching to 80 and enrolled 20 in 3 separate lending circles.

2 circles lasted seven months and 1 circle lasted 6 months. Each participant agreed to save $50.00 each month

All participants exited the project with established or improved credit score, with average credit score increase of 168 points in six to seven months.

437 involved in financial education, 289 in individual counseling, 110

participated in 11 lending circles, $58,950 in total loans and the

repayment rate was 98.39%.

Participants gain financial knowledge, 43% increase in feeling more

confidence in making sound financial decisions, 30% increase in

knowing how to budget and manage own finances

built up saving habits, increased from 36% to 62%

Participants lower debts

National CAPACD Project Achievements

Program Review

• Drawbacks There is a fee involved.Tremendous manpower involved

• AdvantagesLow cost and low riskParticipants gain financial knowledgebuilt up saving habitsimprove financial situation

Conclusion

• This project is the first step to assist immigrants to integrate into mainstream society and fulfill their American Dreams.

• This project helps immigrant learn about the financial system, foster a saving habit, create credit history and improve credit score. This will increase their access to financial products available in larger institutions for large capital needs.

Thank You!