This May, KYCC was selected as a BetterLA Awardee by the Mission Asset Fund to be a Lending Circle provider. The MAF Lending Circles Program turns the common practice of lending and borrowing money between friends and family into powerful credit building. By providing a financial alternative, low-income families and individuals are able to build assets and improve their credit scores at the same time.
“We are excited to be providing Koreatown with zero-interest social loans,” says Doris Valenzuela, KYCC Community Economic Development Specialist. “The Mission Asset Fund Lending Circles program is combining the power of the community with financial stability.”
MAF’s Lending Circles helps borrowers access affordable loans, build credit history, and establish a financially stable future through helping community members open bank accounts and avoid predatory lending.
Each participant takes an online financial training, before meeting with 6 to 10 others in person where they decide upon a group loan amount. Each person has their respective need or goal for the loan, and the loan rotates each month to a different recipient. Credit gets established or repaired in the process.
According to MAF, 54 million people in the U.S. are without access to affordable credit and 17 million don’t have bank accounts. Many are forced to turn to predatory lenders—about 1 in 4 families—with outrageous rates. Payday loans, for example, have an annual interest rate between 391 to 521 percent.
To date, the San Francisco-based MAF and their partners have serviced over 5,455 zero-interest social loans worth more than $5 million, and saved low-income consumers over $1 million in interest and fees.