BALTIMORE — Neighborhood Housing Services of Baltimore and seven local lenders kicked off a new program last week offering short-term loans to low-income residents of East Baltimore as an alternative to high-interest-rate "pay-day loans" and cash advances.
Loans of $300 to $1,000 will be offered for as long as one year, according to Bert Hash, president of Municipal Employees CU of Baltimore, which is participating in the program, organized under the FDIC-sponsored Maryland Banker Community Reinvestment Group. The loans will carry interest rates of 7.99%.
"These are people who need help with a short-term loan," Hash told Credit Union Journal. He added it is not a "payday loan."
The program, which will initially offer $70,000, will be administered by the Neighborhood Housing Services, a local non-profit organization.
Borrowers, who need not be credit union members, will be required to participate in financial counseling and given the opportunity to open a savings account to which Neighborhood Housing Services will contribute $5 a month to match participants' contributions.
