A community of nonprofits is building the financial capability of Asian American and Pacific Islander (AAPI) immigrants across the country.
When you bring together families, friends, and neighbors to help each other achieve their shared financial dreams, you’re leveraging the power of community. This practice of lending and borrowing money in family or social groups — a practice that inspired the the Lending Circles program — is common in communities around the world.
At their core, Lending Circles are about community.
Today, we’re highlighting one in particular: a unique group of partners providing Lending Circles to Asian American and Pacific Islander (AAPI) immigrants across the US. In the Philippines, the practice is referred to as paluwagan; in some parts of China, it’s called hui. With traditions like these to draw from, many AAPI immigrants are familiar with Lending Circles as a source of savings and credit.
In many parts of Asia, Lending Circles are an age-old tradition.
What’s often unfamiliar is the complicated financial marketplace discovered upon arriving to the US. This comes at a real price: 10% of AAPIs do not have bank accounts and many more are “underbanked,” meaning they must turn to fringe financial services like payday lenders and check cashers. According to the FDIC’s 2013 Survey of Unbanked and Underbanked Households, 19% of Asian Americans and 27% of Pacific Islanders turn to fringe services to meet their financial needs.
To bridge the gap between the modern financial marketplace and cultural traditions like paluwagan and hui, we can tailor Lending Circles to meet the unique needs of AAPI communities.
We can start by meeting AAPI immigrants where they are, on their terms.
In this spirit, we offer loan agreements into seven Asian languages: Chinese, Burmese, Nepali, Vietnamese, Korean, Bengali, and Hmong. But this is only a beginning. We can also open-source solutions — so that other nonprofits can build on the lessons we’ve learned in San Francisco and bring them to cities all over the country.
No two communities are alike. And local organizations know best how to handcraft their services to meet their clients’ needs.
That’s why nonprofits across the nation are custom-fitting Lending Circles to their local communities.
Take Asian Services In Action (ASIA), for example. This Lending Circles provider in Cleveland, OH, provides culturally relevant social services to Nepali and Burmese immigrants and refugees, many of whom don’t encounter the concept of a credit score until they’re ready to buy a car, rent a home, or start a business.
Through Lending Circles, these clients are able to build credit with people who speak their native language — oftentimes their friends and neighbors. This system of mutual support provides a sense of security that sets Lending Circles apart from other loan models. It can even help refugees build a new community in the U.S. after leaving their home countries.
“I love seeing our clients’ eyes light up as I explain the Lending Circle model,” says Lucy Pyeatt of the Chinese Community Center (CCC).
“‘Yes, we know that!’ they often reply.” Many of Lucy’s clients are intimately familiar with the concept of Lending Circles: “They’ve participated in them informally with family and friends for years, and they feel so relieved to have a product that they already trust. They feel that their heritage, and their models of financial security, are being respected. It’s a great bridge for them.”
By drawing on their traditions and adapting to their needs, Lending Circles put the power in the hands of the communities themselves. Our partnerships with organizations like ASIA and CCC are the real engine that powers the success of Lending Circles, so that local leaders can create local solutions.
It all started with a collaboration between MAF and National CAPACD.
National CAPACD is an advocacy group on a mission to improve the quality of life for low-income AAPIs. Two years ago, MAF joined forces with National CAPACD to launch a financial capability project with eight AAPI-serving organizations:
Together, we set out to answer a question: Can we boost the financial capability of new immigrants by incorporating Lending Circles and financial education into the existing immigration resources that community organizations are providing? Our new partners started to marry traditional services like language classes, citizenship education, and workforce training with our innovative Lending Circles program and financial coaching.
In just two years, the National CAPACD cohort has formed 56 Lending Circles, with 344 participants.
It’s amazing to think that these participants have generated well over $150,000 in loan volume, all from lending and borrowing with their peers. And the repayment rate is astonishingly high — over 99%. This means that participants are opening checking accounts, establishing credit scores, and entering the financial mainstream for the first time.
Some have been able to rent apartments. Others have used Lending Circles has a source of peer support in a new country. And for many women who moved to the U.S. to join their husbands, Lending Circles offer a chance to exercise their financial independence.
After two years of successes, we’re excited to continue working with this impressive group of AAPI-serving organizations.
Our partners have ambitious plans to deepen their Lending Circles programs and bring them to even more hardworking immigrants across the country. And we have plans of our own to strengthen our network by forging new relationships and improving our tools for partner collaboration, like our online “Lending Circles Communities” knowledge-sharing platform.
We know that the key to success lies in the power of community. That’s why we’re working together with our partners to build even stronger resources for our Lending Circles clients — who, in turn, work together to support each other’s growth.