The Waco City Council is set to vote on an alternative to payday and title loans for city employees as part of a pilot program.
According to Texas Community Capital Administrator Matt Hull, payday lending in Texas is more unregulated than in other states.
Hull said in an annual report by the Consumer Credit Commission, in 2014, 36 payday and auto title lenders in Waco charged borrowers up to $10 million in fees.
The Community Loan Center would allow city employees to get small loans through an online system with a longer term for lower interest than your typical payday or auto title loan, according to TCC.
“This would help keep some of the earnings of the hard-working Waco employees, help retain that money locally from being exported as profit to the payday lenders,” said Hull.
If the city approves the proposal, the TCC, a state non-profit will run the pilot program. It expects to start the program with only a few employers. The TCC raises the funds for the loans from investors, banks with community reinvestment obligations, foundations and philantrophic individuals, according to TCC.
A Waco non-profit, the Heart of Texas Goodwill Industries, could ultimately take over becoming the local lender, if the organization’s board approves it by the end of the month. The local lender licensed by the state recruits employers into the program at no cost. In addition, the lender would have the responsibility of raising loan capital, marketing to employees and finding loans for employee.