Peer Lending Program
In 2008, our Small Business Center staff launched a Peer Lending Circle with a mini-grant from the United Way of Greater St. Louis, Special Initiatives Program. Staff based their model on microcredit projects which have been popular for many years in developing countries around the world, including the work of the Grameen Bank in Bangladesh.
The goal of the Institute’s Peer Lending Circle is to extend small loans (microloans) to aid in the development of entrepreneurship among refugee women, primarily from Africa and the Near and Middle East. Most newly-arrived refugees lack collateral, steady employment and a verifiable credit history. Therefore they cannot meet even the most minimal qualifications to gain access to traditional credit.
Our model is simple. Low-income refugee and immigrant women can receive micro-business loans of $1,000 each to help them finance the start or strengthening of a micro-business. These loans are interest-free and must be paid back within 12 months of her loan closings.
The loan program follows a circle or peer-lending model, in which the women meet regularly as a small group to discuss their goals, challenges and successes. Additional women who are interested in participating in this program can also attend the meetings to learn from and support the other members. The newer members will receive loans as the first members repay their loans, so when loans are paid off in full this money then becomes available to another borrower. This model creates an incentive for the group members to support the business goals of each other and to learn from each other’s experience. To date, this program has a perfect repayment history.
With support of staff and interns, the participants create business plans, financial projections and marketing materials, such as business cards and fliers, to help ensure the success of these small ventures. We also maintain payment records and document each participant’s progress, and submit payment records to credit bureaus. IICDC staff is also involved in facilitating the group meetings.
Among our peer lending clients are refugee and immigrant women who have sewing and clothing businesses, sell retail items such as jewelry and other fashion accessories, men’s and women’s socks, etc. One microloan client is the owner of a home-based child care business who caters specifically to immigrants and refugees.
It is a touching experience to hear the participants discuss their lives before they arrived in the United States and why becoming their own bosses was the best decision they ever made.
(314) 773-9090, ext 104
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