While googling how to open a beauty supply store a lot interesting results came up, including a post from It Is Real: Natural Beauty Enhancements’ Facebook page. The sisters (and business partners), Sarai and Selah, shared their experience of the time they asked an Asian beauty supply store owner how they were able to get loans from the bank to open so many stores within Black neighborhoods. The store owner broke down their creative funding process of using Hui, rather than traditional banking, and how the money pool works to benefit those within the Asian business community.
Last night I asked an Asian Beauty Supply owner how they get loans to open businesses throughout our communities. I was wondering if they got special loans from the government. She respectfully told me that they do a money passing rotation where a group of 10 to 20 of them pool on average about 10 grand each. She said every 6 months each person gets about $100,000 out the pot to start a business. They must pay back into the pot when the business is established. She explained this is how they support and help each other. They only hire family and friends who all work for low wages until it’s their time to get their own business too. The plan is for all 10-20 of them to have a cleaning business, laundromat, restaurant, grocery store, beauty supply, clothing/shoe store or electronic store in our neighborhoods to help build wealth for their families. She also admitted to me that we spend a lot of money with them. This is how they WIN! This is how most ethnic groups who start businesses in our communities are winning. This is exactly the blueprint we need to follow. If we start supporting each other we all could win. Some of you won’t support anything with our own people but we have to change our thinking if we are to all grow and leave wealth for our families instead of leaving dust. We need to have each others back!
In the Asian community, this type informal loan club is known as Hui or Kye. Other cultures refer to it as Partner, SuSu (Sou-Sou), Merry-Go-Round Tanda or Christmas Tree. All are recognized as forms of ROSCA, or rotating savings and credit associations, and have been around for centuries.
PayPal recently launched their own service called Money Pools. PayPal Money Pool account holders can create pages to let their contacts raise funds for a specific savings goal, although there are a few cons to using the service.
- You can only set up a PayPal Pool using your personal PayPal account.
- PayPal may place a “hold” on payments made to your Money Pool at their discretion.
- The person who created the pool can’t contribute to it.
Some of the pros include:
- No fee for setting up a PayPal Money Pool
- Friends and Family don’t have to be PayPal customers to contribute.
- There is no limit to the amount of money that can be collected.
What are your thoughts on using money pools to start or grow your business?
Would you use an online service or do it the old fashion way and collect the cash yourself? Let us know in the comments below!