Zero-Interest Microloans Help Unhoused Californians Keep Their Autonomy

A Santa Clara University Professor Built a Zero-Interest Microloan Program for Unhoused Californians

A program run through the Business School of Santa Clara University is making zero-interest microloans available to unhoused people in the area. Many of these people survive by running their own microbusinesses, whether it be flipping and reselling items or performing services like house cleaning or yard work.

But if their equipment breaks down, is lost, or is damaged during an encampment sweep, it can be difficult or impossible to continue doing business. That’s where the ZiM program comes in.

Filling A Necessary Gap

In a situation like the one outlined above, where equipment needs to be replaced in order to continue doing business, many business owners would turn to their savings, a small loan, or even a credit card to cover the expense. But for unhoused business owners, these options are often not available.

Banking barriers keep many unhoused people from accessing financial services. Many banks require proof of address and other identity documents to open an account, which are easily lost or damaged when you have no safe place to store your things.

Without a bank account or a safe place to store your things, amassing any kind of savings is a substantial undertaking, even if you did have a little extra money to set aside. And even if you had good enough credit to qualify for a loan or credit card, they charge interest that can put you further behind over time if you’re not able to stay on top of it.

Unscrupulous “payday loan” lenders take advantage of this hole in the market to offer outrageously high-interest loans to people with no other options. The zero-interest microloan program offers a better option. One that’s specifically tailored to the needs of homeless people running their own microbusinesses and is completely interest-free.

Small Loans Can Make a Big Impact

Founder of the ZiM program and associate teaching professor at Santa Clara University, Long Le, found that just $350 to $500 can be the difference between homelessness and staying housed for people living on the edge of poverty in Santa Clara County. Those are scary numbers, considering how many of life’s minor emergencies can cause a gap that big.

But it also represents an opportunity, because it shows that a relatively small amount of financial assistance, if delivered at the right time, can have a huge impact on a person’s life trajectory and save the far greater expenses and consequences that come with long-term homelessness.

The first version of Le’s ZiM program had an international focus. From 2018 to 2020, business school students arranged loans for entrepreneurs in places across the global South, from Latin America to East Africa. The program had a repayment rate of 98%, which is similar to traditional bank loans, and it saw many repeat borrowers who were growing their businesses with larger and larger loans each time they paid one back.

Things were working well, but then the onset of the COVID-19 pandemic made international operations impossible. In 2025, the program returned with a more local focus when Le realized how great an impact a program like this could have on the people living right on the university’s doorstep.

Peer-to-Peer Lending Possibilities

The program is currently funded primarily by grants and the program’s existing reserve, and it is providing funding to five clients who have been referred to the program through the Santa Clara University School of Law’s new Unhoused Advocacy Clinic.

Loans are offered based on each person’s needs, up to a total of $500. Repayment terms are flexible and tailored to each individual’s circumstances on a case-by-case basis. And most importantly, interest is never accrued.

With its funding model, the ZiM program can also offer microinvestors the opportunity to invest a small amount, which will be lent to others and earn them a guaranteed return on their investment. This gives unhoused people who don’t run their own businesses or don’t currently need a loan a way to participate in the program, help each other out, and earn back a little interest on their investment funded by the program itself. This allows the total loan pool to grow, enabling the ZiM program to expand and offer more loans to more people.

While repayment rates for this program are still expected to exceed 90 percent, lending money this way offers investors protection. If you gave a friend $20 directly, they may or may not repay you in a timely fashion, but the ZiM program always pays out on time, even if the original loan is not repaid.

“This model empowers people in precarious circumstances to help each other move forward,” says program founder Long Le “The intention here is for the unhoused micro-investor to know that even as an unhoused person, they can still make an impact on others.”

The ZiM program also offers to connect micro-investors with employment opportunities suited to their skill sets and provides financial coaching designed to increase the financial literacy of both micro-investors and entrepreneurs receiving microloans.

Business Schools: An Unlikely Ally in the Fight Against Homelessness

Others in the business school may wonder what the point is in offering zero-interest microloans, and how it can be sustainable or even profitable long-term. Le compares it to credit cards offering interest-free grace periods, but most people applying to his program aren’t able to qualify for something like that, so he sees it as a way to redistribute the financial privileges that good credit brings and to set people on a path toward securing those offers on their own.

When asked about his financial incentive to offer zero interest loans, Le points out that not all incentives need to be financial, saying, “In business, we’re always disrupting to make profits. We’re not disrupting to solve an issue that doesn’t directly affect us. But this program is very Santa Clara, disruption for the common good.”