Workforce Language Services

A “cesta” (”basket,” in English) is a lending circle in which 6 to 12 individuals contribute a monthly sum of money, and the pooled funds serve as a credit line for the members involved. It’s a model that’s well known in Latin America, but cestas are only now beginning to pop up in the U.S.

An organization called the Mission Asset Fund (MAF) is helping cestas in California link to the credit market, so that the peer-to-peer groups can establish credit histories. In San Francisco, 44% of households have no credit history at all, and more than half of Latino adults don’t have bank accounts.

“This data is very discouraging,” says MAF executive director José Quiñonez. “But we decided, really our whole approach has been, to try and view the community from a positive perspective, to appreciate what they have, not what they lack, and to build on what they have.”

The cesta banking model has been called a breakthrough, and one that non-profits can replicate.  Members must act democratically to decide how much to contribute, and who has priority to withdraw their credit. Groups are usually founded among family members or circles of friends where there is a high level of trust. “The pressure to obey the agreed rules, however informal, is more social than legal.” The goal for most members is to get out of credit card debt with other lenders, and expand business operations.

To read more about cestas and how they’re growing in Latino communities around the U.S., click here.