Peer Lending Circle
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 18 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 $1,000 in repayments is available the next borrower will receive their loan. 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, all participant microloan payments are current, and one participant in fact has already completed loan repayment.
A Business Specialist from the Institute’s Small Business Center facilitates the program as well as the group meetings. 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.
More refugee and immigrant women are interested in participating in the peer-lending group to buy a sewing machine and materials. They want to sew clothing and accessories, some of which may be sold within their communities and also through the Institute’s Festival of Nations held each summer and which attracts a crowd of 125,000. Others are street vendors who sell a variety of retail items such as jewelry, men’s and women’s socks, incense, essential body oils, and tank tops. 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. More microloans can be made if additional underwriting becomes available.
Contact Information:
Julie Mauchenheimer
(314) 773-9090, ext 135
