Payday Loans Can Be Made By Non-Profits

Payday loans nationwide are responsible for a large percentage of the really awful, disastrous, family-killing debts that trap low-income Americans. 

Payday lenders will gladly tell you about the problems they face, and the costs they have to cover. These loans are massively profitable, nonetheless, for everyone from multinationals to Indian tribes. 

Lenders blame their  high costs on the fact that they lend without any credit check on the buyer. Even if they are scoundrels, this is a legitimate problem.

Every year there are a small number of non-profits who try to make payday loans at modest interest rates. These good-hearted lenders normally set up a charitable fund to cover the losses that inevitably occur.

Here is the story of two non-profits……

1. Capital Good Fund is a distinctly non-predatory lender. It is a Community Development Financial Institution that offers small personal loans with reasonable terms. The fund makes loans and offers financial counseling in six states now.  

The fund offers two different types of loans: one to help cover immigration costs between $2,000 and $20,000 with an annual percentage rate close to that of a typical credit card (15.99% to 24%). 

The other is a short-term crisis relief loan between $300 and $1,500 that has a 5% interest rate and a three-month deferment period. The short-term loan is most commonly used on rent, utility, Wi-Fi bills and vehicle repairs.

2. Zhou and his co-founder John Li came up with the idea for Fig Loans after meeting at The Wharton School. Their startup employs six people and will use fresh funding to help launch its newest product, Fig36, a turnkey lending-as-a-service platform for non-profits.

  Fig loans standard offer is this: “We pay off your predatory loan of up to $2,500; no interest, no fees, no strings attached. You pay us back over 12 months.”

Sounds like a plan!