'Lending circles' help residents get loans

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It's known as a lending circle. And it has its roots in Latin, Asian and African countries. If it works in the Bay Area, expect it to be emulated in communities nationwide.

Ana Moreno works as a housekeeper, Laura Valdez works as executive director of a non-profit in San Francisco and Cristina Barralaza styles hair in San Rafael.

Each of these women will get hundreds of dollars interest free.

"That's a wonderful idea. I really appreciate to get to a group, because that's the money you get without paying any interest," said Barralaza.

Ana, Laura and Cristina are all members of a lending circle. Each member contributes $50 dollars and every two weeks via an electronic transfer to a bank.

This circle has 12 members, so every two weeks, $600 is collected.

Every two weeks, that $600 is given to a different member via direct deposit. The circle goes around twice and each member gets back what they contributed.

Those in the Spanish speaking community know it as 'cesta populares,' which translates figuratively into 'the lending circle.'

"In our community growing up, when my father's car would break down, they would put together a 'cesta' amongst friends and family and relatives. Just pool their money together to be able to make the cash flow available for emergencies and needed expenses," said Valdez.

The only difference is this circle is more formal. It's organized by the /*Mission Asset Fund*/, a non-profit teaching financial self sufficiency in San Francisco's Mission District.

And because of a grant from Citibank, the Mission Asset Fund is able to back each loan and guarantee it will be repaid.

It helps that members of the lending circle know each other.

"It could be your friends, your family, they have something in common. So if you're not paying on time, you're actually going to lose face with your friends," said Executive Director of the Mission Asset Fund Jose Quinonez.

Just as important as the money, each transaction is reported to the credit bureaus.

"I want to improve my credit. I don't have much credit," said Moreno.

Its estimate each member of the circle has an average credit score of 514. But by the time they leave the program, it's hoped their credit score will increase into the 600s.

That improved credit score will help Ana attain a dream of opening her own restaurant.

Cristina wants to launch a beauty salon and Laura, the daughter of farm and factory workers, wants to support her parents.

"My parents are working poor. They've always been working poor," said Valdez.

The program is the first of its kind in the nation.

"We've gotten lots of attention from national organizations, local organizations that actually want to do this program in their own local communities," said Quinonez.

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