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Tuesday, October 17, 2017

Starting or Participating in a Lending Circle-An Alternative to Traditional Credit


Poor Man Survival

Self Reliance tools for independent minded people…

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A Digest of Urban Survival Resources


Starting or Participating in a Lending Circle-An Alternative to Traditional Credit

Helping people receive cash advances when they are low on money and between paychecks is one way to generate income.

For those of you who spend a lot of time on social media, it’s an opportunity to build a business. Fact is in a down economy there are a lot of people in need of a pay day loan (a pay day loan can be a good thing for a person without a support network in a financial crunch; use it once, maybe twice, and hopefully by then you'll have control of your spending; a pay day loan becomes a dangerous financial plague if a person becomes dependent on it).

Your first effort though should be to avoid taking on new debt. No loans. No credit lines.

So a "cash advance" is a last resort option; use it only in a time of real emergency; for example, you're about to lose your home or apartment or sole vehicle.

  Here are viable alternatives to traditional credit…

Two years ago, Javiar Giron went bankrupt. The 46-year-old father of three had been doing fine since he came to the U.S. in 1985: He learned English on the street, bought a house and managed a carpet business. He began buying and selling, or “flipping,” houses on the side, but that tanked with the housing market and he lost two of his properties to banks.

Giron is emerging from the financial hole he spiraled into by participating in a lending circle – a form of peer-to-peer finance – as a way to save money with a no-interest, no-fee microloan and to build up credit. Participants in this age-old technique can be found in states from Massachusetts to California.

“Credit is gold in the U.S.,” Giron says. “You don’t have credit, you don’t have anything.”

Mission Asset Fund

The Mission Asset Fund facilitates Giron’s circle, in which a group of people lend money to one another. The San Francisco-based nonprofit organization known as MAF formalizes a traditionally informal practice partly to keep participants away from payday lenders and other sources of short-term, high-cost credit.

The organization brings together about 10 low- and moderate- income individuals to join a circle. The assembled group collectively decides on the amount to be loaned, say, $1,000. Then the members contribute part of that amount – $100 apiece in this case – to the pool of funds every month, and one gets the full $1,000 each time. By the 10th month, all participants will have received that amount and all the loans will have been totally paid off.

Lending circles help participants raise capital for various expenses: car down payments, debts and small business investments, among other things. But the microloans, which MAF insures, are less about the cash and more about boosting credit scores to give participants access to mainstream financial services.

Learning through lending circles

“Part of it is a process of education, making sure they are budgeting and getting them at a place where they can make good financial decisions,” says Jose Quinonez, MAF’s chief executive officer.


There are no specific requirements to participate in one of the circles, although the organization discourages people whose debt payments consume more than half their income. Those who do join sign contracts through MAF, which guarantees each member will get their money back even if some don’t pay their share to the circle.


“We have sort of like a mini-FDIC insurance to the lending circle,” Quinonez says, referring to the Federal Deposit Insurance Corp., which backs bank deposits. “That guarantee that we provide brings more peace of mind — it gives people assurance that the structure will hold.”

Default rates are less than 1% in MAF circles, partly because of the social responsibility that being in such a group entails. The organization reports all payment information to credit bureaus TransUnion and Experian, so participants can benefit by improving their credit scores.


How to Use a Lending Club

How does

an online credit




Lending Club uses technology to operate a credit marketplace at a lower cost than traditional bank loan programs, passing the savings on to borrowers in the form of lower rates and to investors in the form of solid returns. Borrowers who used a personal loan via Lending Club to consolidate debt or pay off high interest credit cards report in a survey that the interest rate on their loan was an average of 24% lower than they were paying on their outstanding debt or credit cards.

By providing borrowers with better rates, and investors with attractive, risk-adjusted returns, Lending Club has earned among the highest satisfaction ratings
in the financial services industry.


Innovation transforms lending

Lending Club is America’s largest marketplace connecting borrowers and investors, where consumers and small business owners lower the cost of their credit and enjoy a better experience than traditional bank lending, and investors earn attractive risk-adjusted returns. 4

Here's how it works:

  • Customers interested in a loan complete a simple application at
  • We leverage online data and technology to quickly assess risk, determine a credit rating and assign appropriate interest rates. Qualified applicants receive offers in just minutes and can evaluate loan options with no impact to their credit score
  • Investors ranging from individuals to institutions select loans in which to invest and can earn monthly returns

The entire process is online, using technology to lower the cost of credit and pass the savings back in the form of lower rates for borrowers and solid returns for investors.


People around the world lend and borrow with each other when bank loans aren’t an option. With technology and credit reporting, MAF’s Lending Circles formalizes this practice to help borrowers access zero-interest loans that help them build credit. With more savings, less debt, and better credit, Lending Circles participants can finally pursue their dreams: they go to college, buy homes, become citizens, and start businesses.

How It Works

Lending Circles provides zero-interest loans that help people build credit. Every participant starts by taking an online financial training class. Then, the six to twelve members meet in person to form the Lending Circle and collectively decide on the loan amount; for example, a group of 10 people might decide they each want a loan of $1,000. Each participant in the Lending Circle can have their own goal for the money, whether it’s paying off debt or paying for tuition.

Everyone in the Lending Circle makes the same monthly payment, ranging from $50 to $200, which MAF reports to the credit bureaus. The loan rotates monthly to a different participant: in the first month, one participant receives $1,000, and each month another member receives the total sum until everyone has gotten a chance. The program is proven to help participants establish credit histories for the first time and increase low scores.


Lending Circles are zero-interest credit building social loans

How to survive tough economic times in the days ahead.


Note:  The inspiration for this was a book I recently read by Lisa Servon – The Unbanking of America: How the New Middle Class Survives.  Excellent reading & available at:


Bruce, the Poor Man, free thinker, social critic & cynic


Additional Resources

Saving money doesn’t have to be hard. In fact, there are many ways to save money that are easy and fun. Here are 95 painless ways to save money.

7 Easy Ways to Build an Emergency Fund From $0 (Wisebread): It is possible to quickly build an emergency fund from zero, even if you are living paycheck-to-paycheck. Here are several ways you can fill up your emergency fund fast so that you are prepared before the next disaster hits.The sex robot revolution is approaching, study says

The Best Checking and Savings Account Promotions and Deals  No bank wants your business as badly as the bank that doesn’t have it. In fact, they are often willing to pay you to become a customer. If you are looking for a new bank, check out these bank promotions.

Why half of Americans can't come up with $400 in an emergency (USA Today) "As recently as 2016, the Federal Reserve surveyed more than 5,000 Americans about their financial situation. Among the findings was one startling statistic: Approximately 46% of Americans stated they do not have enough money to cover a $400 emergency expense."

Frugal Home Winterization
Reduce your winter heating bills.


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Helpful Brain Boost…

Keep your brain sharp by taking an afternoon nap, it is proven to boost productivity and make it easier to learn and store new information.  A new study from the University of Pennsylvania found that those who regularly enjoyed daytime naps of up to one hour had better memory and thinking skills as they aged!

>>Napping prevents bran shrinkage caused by stress and a shortfall of nighttime sleep.  Keeping your neurons young and healthy.


>>Want to improve your brain even more?  Learn how here:


You Have a 16-Cylinder Brain-Learn How to Use it & Re-Awaken the Genius Inside You!


I know everyone is short on time in this hectic world so I’ve kept this PDF short and to the point with links to expert how-to articles and guides including:


·         How to Increase Your Intelligence

·         6 Step Brain Exercise Steve Jobs Used to Boost Creativity

·         6 Simple Habits to Boost Your Intelligence

·         The Best Vitamins to Increase Brain Function

·         How a Harvard Brain Specialist Keeps Her Brain Healthy

·         A Review of the Top 10 Brain [Limitless] Pills

·         How to Protect Your Cognitive Function




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DAR said...

As more folks become "bankless" these kinds of resources become more useful to the little guy and this practice in one form or another has been common for centuries...good piece!

Damian said...

You ALWAYS provide a nice range of solid resources for the little guy and thought provoking ideas-thanks!

Yvonne said...

Loaned my brother $12,000 - never heard from him again and it left me in lurch. I've disinherited him. Ironically, I have no loans, paid cash for, home, etc.-no credit cards & as a result, I have 'bad' credit & pay higher premiums for various insurance products so I broke down & got a credit card to build up some credit. I feel that's kind of stupid especially in light of the Experian breach!