What is a lending circle? A lending circle is a zero-interest and zero-fee social loan that helps to establish or improve a credit history and score. It can also serve as a savings vehicle for those who are motivated by deadlines or by working with their peers.
How does a lending circle work? A group of people get together and agree to contribute to a communal fund on a monthly basis. Each month a different member receives the money in the fund for his or her own use. The lending circle is complete when each participant has accessed the monthly fund. In this way, every member of a lending circle is both a borrower and a lender.
El Centro de la Raza’s Lending Circles are open to anyone 18 years and older. Those interested in participating should:
- Attend one of the regularly scheduled informational meetings where they can ask questions and learn more about the program.
- Schedule a one-on-one intake appointment in which they will work with a counselor to decide if lending circles are a good fit for them and to which they will be asked to bring:
- A government-issued photo ID such as a driver’s license, passport, or consular ID
- Recent proof of income for one month (e.g.: pay stubs, profit and loss statement)
- Recent monthly bank statements for all accounts
- A voided check
- A social security number or ITIN
- Attend a formation meeting at which the lending circle will be created and where the monthly contribution amount as well as the monthly disbursal order will be decided by the group.
- All participants are strongly encouraged to attend a Bank On-certified eight-hour financial education series.
All lending circle services are available in English and Spanish. People who could benefit from participating in a lending circle include: those seeking to establish a credit history without paying excessive fees or interest rates; those who have addressed previous credit challenges and are looking to further repair their credit by the addition of positive information; those who have difficulty accessing credit because of their residency status; those who cannot pay interest due to religious considerations; and those seeking to improve their saving habits.
For more information send an email to firstname.lastname@example.org.
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