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 MECU, 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 The Credit Union Journal Friday. 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.
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.
