Eight CUs To Use Funds To Expand Payday Loan Alternatives
The National Federation of Community Development Credit Unions and JPMorgan Chase & Co. have selected eight credit unions to receive grants to be used for alternatives to payday lending.
Selected for the grant funds, which total $225,000, were:
*ASI FCU, Harahan, La. ($25,000.) The $193-million ASI FCU plans to roll out APPLE consolidation loans that allow members to pay off debts of up to $1,000 with predatory lenders. Borrowers have up to 18 months to repay the 10% APR loans. Part of each loan payment will go into a savings account to help the member in future emergencies.
* Bethex FCU, Bronx, N.Y. ($25,000.) The $8-million Bethex FCU plans to expand its "Cash in a Flash" program, which provides emergency loans up to $500 without a checking account or good credit history. It also offers credit counseling, financial literacy training and other services.
* Faith Community United CU, Cleveland ($50,000). FCUCU's plan is to ease requirements for newer members and increase their "Grace" payday loans by 30%. It requires borrowers to save a minimum of $10 per month and show proof of employment. Almost 30% of its members are below the federal poverty line, and many qualify for "Grace" payday loans.
* Lower East Side People's FCU, New York ($25,000). The $12.5-million CU is planning emergency, nonrenewable loans of up to $500 to any employed member who gets paid by check. It said it expects to make at least 500 payday alternative loans, enroll 250 borrowers in financial literacy classes and counsel 200 about economic independence.
* Northeast Community FCU, Mission Area FCU and Patelco CU, San Francisco ($50,000). The three credit unions have formed a consortium to offer financial services to San Francisco's most underserved populations. It will refine Northeast Community FCU's "Grace Loan" program and expand it to Visitaci?n Valley, Excelsior and Bayview-Hunters Point.
* South Side Community FCU, Chicago ($50,000). Chartered in November 2003, SSCFCU launched the first payday loan alternative on Chicago's South Side. It will use its grant to more than triple the number of Payday Alternatives Loans in 2005.