Written by Shazia Siddiqui | November 26, 2022

 

To start a business

Interest free money circles helped several users build credit and pursue goals they would have never imagined. Take the story of Maria and her husband Fernandez. In 2020 at the cusp of the pandemic, they arrived in Canada with very little knowledge on managing finances but had incredible grit and determination. Their dream was to open a restaurant and give Toronto a taste of their long-line of ancestral recipes. Managing finances and saving money had always been a weakness for Maria and her husband.

Making ends meet was a daily struggle and the dream of a restaurant? It didn’t help that the pandemic secluded further. In October 2020, Maria dropped by a community center and casually peaked at the bulletin board. ‘Círculos de préstamos’? She immediately had flashbacks of her mother and aunt speaking about this over ceviche back home. Maria took the leap of faith and decided to register to learn more. After all, what enticed her was a $0 fee, interest-free access to a loan from her community that knew her well, and financial management courses. What was there to lose?

Within 8-12 months of joining the peer-money circles, not only did her credit improve – which allowed them to apply for a credit card – but they were also eligible for a restaurant loan! Their dreams were finally coming true. As of today, Maria and Fernandez have found much happiness in their restaurant and encouraged several of their friends to join peer money circles.

 

To buy a car

Shewta has always paid her own way. Her straight-A average won her a full scholarship to San Francisco State University. At the same time, she worked a 40-hour work week as a waitress at a cafe. But when she applied for a credit card after graduation, she was turned down because she had no credit history. So, she joined a money circle – a small group of people who chip in every month to lend money to one another at no interest. The circle offered her something no bank would: a chunk of cash.

 

After faithfully making payments, she saved enough to buy a 1997 Ford Mustang. While informal money circles among families, acquaintances, co-workers and neighbors are familiar to hundreds of millions of people all over the globe, they are rarely recognized by mainstream financial institutions.

Source: New York Times, 2014