Do-It-Yourself Financing

When Do Van Tron escaped from Saigon to San Jose in 1982, no bank would take a chance on his business prospects. Do lacked a credit history, had no money and spoke no English. Today, however, the 31-year-old refugee publishes a Vietnamese-language newspaper, tools around town in a silver Jaguar and has started plans to build a shopping center. The reasons for his rapid rise: long hours of work, plenty of thrift and $4,800 in start-up capital from an unconventional source. Like thousands of other immigrants, the budding entrepreneur tapped an ethnic loan club for his seed money.

Such clubs amount...