I recently wrote an article about the methods you can use to get startup capital for a new business. There are a lot of different methods (including the ten that I wrote about in that article). One of the ones that interests me most is one that isn’t so common. It’s called a ROSCA group.

ROSCA stands for Rotating Savings and Credit Association. This is a small group of people that agrees to get together to lend one another the money that they each need to start a new business. From what I understand, the way that it works is this:

• A group is formed among people who have a small amount of money but not enough to start their own business.
• Everyone in the group meets monthly and brings a membership fee to the group each month.
• The fee is collected and put into a group account for one year. At the end of the year, the fee goes to the first member to start his or her business.
• The group continues to meet. The fees collected for the second year go to a different member.
• This continues until everyone in the group has taken their turn at getting enough money to start a business.

There are obviously risks that you take when you get involved in a group like this. It requires a commitment from people to stick with the lending process over a long period of time. As a result, it’s typically only done in developing nations where other options for getting loans are limited.

However, I think that this might be something that would be beneficial to people in today’s economy. It’s getting harder to get personal loans. At the same time, people in some communities are trying to come together to help one another out. Small community-driven ROSCA groups seem like a smart solution.

What do you think?

Tags: get a loan, get money, kathryn vercillo, loans, money, Personal Finance, rosca, rosca group, rosca loan