Nonprofit aims to formalize immigrants’ lending traditions


First Posted: 2/7/2015

CLEVELAND (AP) — The six Nepali-speaking Bhutanese work together sewing uniforms at National Safety Apparel on Cleveland’s west side. Sharing a job, in addition to a cultural bond, made it easier to import the lending circle from the old country.

Each member dutifully chips in $100 a month. They take turns collecting the pot, $600. That’s enough money to cover a major expense, like a rent deposit or a down payment on a car.

The lending circle also offers some social security. When Kalpana Mouger’s grandmother died last month, the young woman took her share of the kitty early. In her grief, she did not have to worry about how to pay for a funeral.

The centuries-old circles launched small businesses in the refugee camps in Nepal. Before that, they served as an informal banking system in neighboring Bhutan. Now, they may speed assimilation and success in Greater Cleveland.

Resettlement experts hope to use lending circles, where default is almost unheard of, to help immigrants and refugees acquire credit scores. That, they hope, will lead to access to the formal financial system and its capitalist tools, like credit cards and bank loans.

“There’s a lot of people out there who simply are operating in their own economy,” said Michael Byun, the executive director of Asian Services in Action, a nonprofit group that works with refugee families in Cleveland and Akron.

The saving circles, as they are also known, serve a critical function in an immigrant community, Byun acknowledges. But many of the steps toward the American dream, like buying a home and starting a business, require serious cash.

“At some point, we need them to be using the banking system,” he said.

ASIA recently received funding to try and formalize local lending circles, in part, by introducing record keeping. It marks the first known attempt to leverage one of Northeast Ohio’s most culturally distinct financial systems.

The private loan groups are known as kyes in the Korean-American community, huays among Chinese immigrants. Mexicans call them tandas, while Asian Indians refer to chit funds.

They are as old as Cleveland and as relevant as the newest arrivals.

Every circle has a leader, typically a person of some stature. Among the sewers, it is Gori Maya Acharya. She’s a quiet, cheerful woman whose bindi — the red dot near the center of her forehead — symbolizes honor and prosperity in her Hindu culture.

She collects $100 cash from each member each month, and hands the total to the member whose turn has come. There are late fees to be tallied and special requests to be considered, but the system runs smoothly on peer pressure and mutual trust, members say.

At a meeting at a Bhutanese home on Cleveland’s west side, Kalpana Mouger explained how she tapped the circle for $500 when her grandmother died.

“We were in need,” she said. “If we were not in the circle, I find it very difficult.”

Another member used the circle to cover his rent when he fell ill and missed a week of work. The regular payout buys bicycles, winter coats and school supplies.

There are at least six lending circles at work in the Bhutanese community, which is comprised of several hundred families in Cleveland, Lakewood, Cleveland Heights, South Euclid and Akron.

Most of the families were forced from Bhutan in pogroms in the 1980s and 1990s. They languished for years in United Nations’ refugee camps in Nepal, which is why they speak Nepali.

Lacking a cultural community in America, the Nepali-speaking Bhutanese faced a tougher start than most immigrants when they began arriving in Cleveland and Akron six years ago.

As they learned English and advanced in jobs, the Bhutanese began buying homes. Three grocery stores have emerged in the Cleveland community. Resettlement experts think more businesses could bloom if more Bhutanese had credit.

“Peer lending is the first step,” Byun said. But homes get bought and businesses get started with bank loans.

“There’s a lot of this non-traditional lending going on, but it’s never captured by financial institutions,” he said.

Two funding sources will allow ASIA to begin to push the traditional circles toward mainstream finance, including a $100,000 grant from the Knight Foundation.

ASIA is also partnering with the National Coalition of Asian Pacific American Community Development, which works to leverage lending circles in other Asian American communities. That program is supported by big banks, like JPMorgan Chase.

ASIA will seek to grow and formalize the circles by introducing financial literacy classes as well as record-keeping, to create a payment history for the credit bureaus.

The proposed changes sound both simple and momentous. Like, circle members will be encouraged to begin contributing and taking their money by check.

Susan Wong, an ASIA counselor who will manage the program, is also talking direct deposits.

“They have jobs. They’re looking for a house,” she said. “They want to know how to get the cash. The system is different here.”

Selling the new concepts falls to Nar Pradhan, an industrious Bhutanese immigrant whose family owns a grocery store and a restaurant. He’s an outreach worker for ASIA. It was at his home that the lending circle members met last week.

Seated around a kitchen table, Pradhan reminded them how they pooled their money to start small businesses in Nepal, just as their parents did in Bhutan.

“Back to the country, we didn’t have a means of credit,” he said. “Over here, credit is very important.”

The sound of a tradition changing was a long silence.

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