On reaching $1.2 million in loans

August 1, 2012: $1.2 million dollars in loans may not be a lot of money to a big financial institution, but to us, it's a huge amount. In just four years, Mission Asset Fund (MAF) has serviced 988 Lending Circles™ loans. We started with just 80 loans in 2009 and now we're up to 438 in 2012 – a 447% increase! And the year is not yet over. But the number that keeps awing us is the fact that – as of today – not one participant has walked away from their responsibility of paying back their loan. It seems almost magical that we still have 100% repayment and 0% default rates.

 After much head-scratching and data-crunching to figure out why, we learned that this level of loan performance is not magical at all. In reality, it's to be expected given the social element to the loans. Every participant is actively involved in a group that determines the terms, the amount, and order of who gets the loan. This level of involvement is not only critical - it allows folks to exercise power over their finances. MAF is merely the facilitator, recorder and guarantor of the social loans.

 

What’s really magical is the dramatic improvements we've seen in people's financial lives in such a short amount of time. Participants save money, buy houses, start businesses and even pay down high cost debts. Those buying houses are saving tens of thousands of dollars in interest because a higher credit score gave them access to prime rates; those that started businesses are confident that they can access low-cost capital from mainstream financial institutions to manage and grow their investments; and those paying down high-cost debt, like payday loans, are gaining peace of mind knowing that they are slowly getting control over their finances.

This is real. And the impact shows most clearly in how lending circle participants walk. With a stronger spring in their step, they are assured and confident and on a course to improve their financial lives. That’s magical.

But of course, this could not be possible without their hard work and the support of our funders – pioneers in philanthropy – for allowing this great work to continue.

Sincerely,
Jose Quinonez