Let’s Buddy Up: Joining the Lending Circle network

MAF collaborates with CABO to expand Lending Circles in Los Angeles

When the Assets & Opportunities Network convened in December, Andrew Chang and I had just met, but we ignited a friendship that compelled us to find a way for our two organizations, MAF and CABO, to expand Lending Circles in Los Angeles.

Fortunately, the JPMC technical assistance fund for A&O Members, along with support from Citi and key funders, enabled us to organize a “roadshow” presentation on the Lending Circle model with CABO network members, as well as lead an in-person training for MAOF and CCNP, MAF’s two newest Lending Circle providers.

The roadshow on June 4th and training on June 6th sandwiched well with the CFSI 2014 EMERGE Forum, where MAF CEO Jose Quinonez served as a panelist. Coming full, dare I say “lending circle”, just a couple years before, MAF received an award from CFSI to expand Lending Circles through the Bay Area. Since then, MAF had not only proven through an academic evaluation the success of individual participants including credit score increases and debt reduction, but the ability to replicate the model through non-profit organizations in other areas.

Now MAF is providing Lending Circles through partner non-profit organizations in 11 states.

MAF is looking to expand further, including New York, Texas, Florida, Chicago, the Mid-atlantic.  MAF had been able to scale, and will continue to even more by employing innovative technology including online financial education and web-based trainings through a new “Lending Circle Communities” platform.

MAF’s roadshow took place at the United Way in Los Angeles. Over ten financial coaches within the CABO Network participated to learn about Lending Circles, a culturally relevant model of social lending and affordable, responsible product to build credit and realize larger financial goals.

Though the challenge of accessing affordable credit is not unique, there are certain ways of course this plays out for local communities, like the unbanked community in Los Angeles.

Andrew shared for example, how Los Angelinos with thin credit files often borrow at a 25% interest rate for a used vehicle at “Buy Here, Pay Here” car dealership.  GPS tracking devices and “kill switch” allow the vehicle to be easily repossessed in instances of default.

California Governor Jerry Brown signed legislation that makes installing these devices illegal without the consent of the borrower, but sub-prime borrowers often have few alternatives.  They also end up paying more for less without a responsible alternative to establish credit before taking out a loan.

Since moving to Oakland four years ago from New York, I have gotten used to relying on public transportation, but I quickly learned during what felt like a family road trip to Universal Studies, that having access to a safe and reliable vehicle is not just a part of the car culture, but a necessity in Los Angeles.

Better credit, not only means more saving, but more financial security and peace of mind, so that hard-working families can get to work and take care of their families.

I look forward to the next A&O convening to share our story of collaboration with other organizations in the asset-building field.