How Barrio started a microcredit initiative

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Barrio published a report on the feasibility of microcredit and launched 2 lending circles in partnership with Riverfront FCU. Preliminary data looks promising and Barrio plans to launch additional loan circles this year. If the story interests you, read on. Otherwise, click here to go directly to the report.

Phase I: I have an idea

At the height of the pandemic, a local funder approached Barrio with an unusual request… They were interested in funding a lending circle program in Reading.

“With all due respect, we are a community development arts organization. Why do you ask us? we replied.

“Lending circles require trust. I hear that Barrio is deeply rooted in the community. It looked like it could be a game.

Our curiosity was piqued, but we needed more research.

Phase II: Community inclusion in program design (who are we building this for?)

Our secret to success is very simple. Before piloting a program, we talk to those who will be affected to determine the need. The funder understood our commitment to living our principles and respected our role as a trusted institution in the community to conduct a feasibility study. The resulting 17-page report, published on our siteinvestigates community appetite and local capacity for such a program and presents our findings. spoiler alert: there was a need!

Phase III: Develop strong partnerships

Just because a need exists doesn’t mean Barrio should or could try to meet it. Barrio is not a lending institution and our board has expressed capacity concerns. Barrio often dances at the edge of possibility, and we needed a partner who was willing to think and dream creatively with us. After several unsuccessful attempts to find a strong partner for the project, the cream rose to the top. Riverfront Federal Credit Union came forward to support the model. As soon as they heard our proposal, they welcomed the idea and said it fit perfectly with their mission to help people of modest means achieve their financial goals.

Phase IV: Launch a minimum viable pilot project

The Barrio model is based on agile implementation, rapid learning and failure. We launched 2 pilot lending circles in fall 2021. The first circle supports microentrepreneurs, while the second focuses on small personal loans to support personal credit repair. Circles meet regularly to hold each other accountable and receive business and financial support.

Phase V: Monitor, modify and amplify

To date, we have a 100% on-time repayment rate for these first two pilot loan circles. In April 2022, we will be hosting several information sessions for our next series of Lending Circles, which is expected to launch later in the spring. If you are interested, do not hesitate to contact [email protected] to be sure to be informed once the dates of the sessions are announced.

You can read our full report by clicking below

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