What does the Lending Circles program offer?
The Lending Circles program provides small (micro) loans to participants in facilitated borrower groups of five to six clients. The program follows microfinance group-lending principals, in which peers evaluate each other’s progress and make funding recommendations to the Rural Center. The Rural Center will facilitate the groups using video conferencing and other media to unite borrowers in different regions of North Carolina. A typical loan in this program will be less than $3,000 ($5,000 maximum) with terms of one to two years. Personal guarantees are required for all loans.
What are the eligibility requirements?
- Client must plan to start a business within a year in one of North Carolina’s 85 rural counties
- Client must have started a basic business plan before entering the lending circle
- Client must fill out a pre-application to gather income, credit and collateral basics
- There is very limited initial underwriting required on credit, income and collateral with a few exceptions:
- Client may not have an unsettled public judgment, current bankruptcy, or taxes/student loans in collection
- Clients with excessive derogatory credit issues will be excluded from the circle until these issues are resolved
- Clients may be located anywhere and in different business stages
- Client must have access to a computer with high-speed internet and a webcam (we can help with this if needed)
What are the ground rules?
- Each member of the group will participate in weekly peer-to-peer discussions
- The entire group will also meet by webinar on a weekly basis for six to eight weeks, and then less often
- All clients sign a confidentiality agreement and a group contract
What are the commitments?
Each week, lending group members will meet collectively and the group facilitator will introduce a new discussion topic. While each individual tracks through the process at his/her own pace, each will share updates and reports on their progress to the group.
Each group member is required to meet with at least one other group member per week. The facilitator will monitor and track a required sequence of peer-to-peer meetings among group members. Meetings are at least 30 minutes long and include a meaningful conversation about each member’s business activity. Each group member must meet with every member of his/her group at least every eight weeks.