NOVEMBER 8 — The Community Loan Center, which offers low-interest, low-fee, small personal loans through employers as an alternative to predatory paydays and auto-titled lenders, closed its 100,000th loan last month since the program’s inception. issued a loan. 2011.
CLC was founded by Brownsville Community Development Corporation (now Come Dream Come Build) and Rio Grande Multibank. CDCB manages CLC RGVs and multibanks. Multibank was founded by six lenders in 1994 to support affordable housing and small business development. Today, the CLC program has grown to a network of 23 local lenders in 11 states.
CDCB executive director Nick Mitchell Bennett said the 100,000 loans represent “a lot of money.” About $94 million has been lent, saving the borrower over $77 million in fees and interest.
“About 40,000 of those were done here in the Rio Grande Valley, and another 60,000 were done in 19 other (CLC) franchises that we started around the country,” he said.
Mitchell Bennett described the CLC Loan Program, which uses an online lending model, as a nationwide franchise that builds relationships with local community lenders. Franchisees use their own financing capital and recruit local employers to participate.
“We’ve created something that has had a real impact, yet it hasn’t been replicated anywhere in the country,” he said.
According to CLC, through local employers, CLC offers qualified employees the opportunity to borrow up to $1,000 at “reasonable interest rates” compared to payday and auto title loans. . The borrower has a loan term of 12 months and no penalties for prepayment. The borrower repays the loan through payroll deduction based on the payroll schedule. Payments should not exceed $23 per week for unsecured personal loans.
Meanwhile, prospective borrowers will find a free, no-obligation app that offers tips on topics like getting out of debt, managing student loans, building a retirement savings plan, becoming a homeowner, and accessing traditional forms of credit. Financial education available.
All franchisees use the same CLC branding, loan software and package of loan services including loan processing and documentation, loan financing and loan services. Franchisees receive training and technical assistance through Texas Community Capital, which operates as a community loan center in America and acts as a coordinator for the CLC franchise network.
CLC RGV spokeswoman Marcela Sentz said particulate civil servants and private employers frequently take CLC loans as part of employee benefit packages, although some employers , reported that loan programs helped reduce employee turnover. Because of the convenience of getting a loan when you need it and having it automatically repaid through payroll deductions.
The payroll deduction aspect also keeps default rates low, allowing CLC lenders to charge a relatively low interest rate of 18% and a loan origination fee of $20, she said.
According to Saenz, employees/borrowers have high approval ratings for CLC due to the ease of obtaining loans when they need them and the convenience of automatic loan repayments through payroll deductions. , she said, supports the program because it shows that loans to low-income workers “can be offered at a reasonable price.”
Wendy Hanson, board member of Rio Grande Multibank, said the CLC was “created to provide needed and affordable cash assistance to working families in our community.” The 100,000-loan milestone was “a celebration not only for our community, but for 19 others,” he said. A community with a CLC franchise. ”