This investment offers zero profit and zero safety — why people everywhere still use lending circles

Community-based lending channels aren’t solely based in the U.S.; they’re expanding overseas, building on centuries of communal funding. A major historical community lending source is the Keh, an ancient Korean-based community lending model that allowed borrowers to borrow directly from local community finance sources, often including friends, neighbors, and even family members as organizational lenders.

Now, centuries later, local community lending groups have organized more tightly and are now typically found at Rotating Savings and Credit Associations (ROSCA), which stand as a thriving component in the larger alternative lending ecosystem.

Overall, the worldwide crowdfunding market is rising. Data from Research and Markets shows crowdfunding has grown from $20.34 billion in 2025 to an estimated $23.82 billion in 2026, representing a compound annual growth rate of 17.1%.

Of that marketplace, debt crowdfunding maintains the largest lending share, comprising 51% of the overall crowdfunding market, resonating with lenders and borrowers who view the channel’s predictable repayment terms, fixed interest rates, and relatively clear loan and investment terms as favorable.

“They’re a great source of capital, with no interest or profit,” Jacob Bayer, a certified financial planner at Jacob Bayer Wealth Management, told Moneywise. “Lending circles have existed among immigrant populations and underserved communities to address the issues created when traditional banking fails.”

How ROSCAs are structured

How has community crowdfunding endured from its Korean Keh origins? Mainly by sticking to a simple and effective script that works, if applied correctly.

Lending circles (ROSCAs) are groups that agree to contribute a fixed monetary amount on a fixed schedule – think 10 people contributing $100 each, with one participant receiving the total amount each round in a scheduled rotation.

Basically, community donors fund borrowers for a worthy cause like a high school sports team’s trip out of state or for a new local food bank, with little or no focus on any return on investment. While there are no fees or interest rates charged, there’s a regular repayment timeline (usually each month until the debt is fully repaid).

“A lending circle actually provides a behavioral return,” Cody Schuiteboer, President and CEO of Best Interest Financial, told Moneywise. “Members of a lending circle are compelled to be disciplined with savings, and the circle allows members to combine their individual but small savings into one big savings pot that is disbursed periodically.”

There are few guarantees with community lending circles

One big potential downside with ROSCAs is that sometimes they work, and sometimes they don’t, and it’s all based on human emotion, rather than credit scores and risk management.

“With this model, nobody earns a return, and collateral is essentially nonexistent,” Bayer said. “What makes lending circles work is social capital. In this model, collateral is your reputation.”

The consequences of default are all-too human, including facing your neighbors, family, and church, which can be a stronger enforcement mechanism than credit scores.

“This model works when the group is genuinely small and close, and the group leader is trusted and consistent,” Bayer noted. “The model fails when it is beyond close groups of people, when the group is large, and when the group leader mismanages funds or runs off with funds.”