Pooling community dollars: a 'susu' can mean money for your business - rotating credit associations

Black Enterprise, May, 1997 by Sheryl E. Huggins

If you're an aspiring entrepreneur or have been in business for less than three years, you've probably had to be pretty creative in order to raise capital and earn credit. You know about credit card financing, factoring and begging family and friends. But have you ever tried a susu?

Susus, as rotating credit associations are called in parts of the Caribbean, are especially popular among immigrants for raising capital quickly. Susu is derived from the Yoruba word "esusu," which roughly translates to "pooling the funds and rotating the pot." According to Roy Hastick Sr., CEO of the Caribbean American Chamber of Commerce & Industry in Brooklyn, New York, a susu involves a group (usually five to 10 family members or friends) that contributes a set amount of money each week into a pool for a certain period of time. Each week, one member gets a "hand"--the entire amount of the pool collected for that week. Once each member has received a hand, the susu is usually dissolved. Weekly contributions can run anywhere from $5,000-$1,000. Hands generally range from $5,000-$15,000, depending on the size of the susu. Although susu hands are most often used for securing home mortgages, they also come in handy for cash flow management and raising seed capital.

Delroy Wright, owner of the Source Health Food Store in Brooklyn, made regular use of a susu for funding inventory purchases during the first years of his four-year-old business. And the practice runs in the family. His sister Gloria Thompson has been a susu banker for over 24 years. She financed her Brooklyn-based business, Gs Laundromat, using an $80,000 hand.

Susu bankers assume the responsibility for collecting and keeping track of the contributions. While no specific qualifications are required, the banker is generally someone who is trusted and respected throughout the community. Wright says susu members should also trust and know each other well. While participants can purchase insurance to protect against loss, trust is the prevailing factor.

Banks are beginning to recognize the idea. The Central Brooklyn Federal Credit Union looks at recommendation letters from susu bankers when reviewing credit histories and has even put together two business-related susus as a way of attracting more customers.

If you're interested in starting a susu:

* Deposit the funds collected in an accredited financial institution on a regular basis.

* Keep the cycle short--two to four months is typical--and the weekly contributions realistic. Members shouldn't commit to anything more than they can comfortably part with.

* Don't hesitate to inquire about the salary, employment and credit histories of prospective members.

* Keep the number of members low. The more members, the harder it will be to run things smoothly.

For more information, contact the Caribbean American Chamber of Commerce & Industry at 718-8344544, or the Central Brooklyn Federal Credit Union at 718-399-1763.