“CU Community Credit Union rolled out the Fresh Start Loan Program on Tuesday afternoon at a news conference. It’s a more affordable alternative to traditional payday loans that it hopes will provide much-needed relief to people struggling in the payday loan debt cycle. The City of Springfield and its Impacting Poverty Commission support the effort.
“There are many people in Greene and Christian Counties who are drowning in debt, and they turn to other costly solutions to solve short-term liquidity problems,” said CU Community Credit Union President and CEO Judy Hadsall. “Our hope is that we can help fill in the gaps where other financial products haven’t been able to provide assistance and create a lasting impact for people’s financial well-being.”
The U.S. Treasury recently awarded $1,988,750 in grant dollars to CU Community Credit, which the credit union plans to use to roll out the new loan program. CU Community is certified by the U.S. Treasury Department as a Community Development Financial Institution (CDFI) – a specialized financial institution that works in underserved markets.
The need for credit building and debt consolidation to reduce the burden of poverty is greater in Springfield than almost anywhere in the state. Approximately 26 percent of Springfieldians live at or below the federal poverty level. Many work two jobs to try to make ends meet. Despite relatively low unemployment rates, the Federal Reserve designated the community as in “severe fiscal distress” due to the high incidence of poverty.
The Missouri Division of Finance says nearly 2 million payday loans were issued in Missouri from Oct. 2013 to Sept. 2014. The average amount of each loan was nearly $310 and the average annual percentage rate (APR) was almost 452 percent. Payday loan borrowers in Missouri can roll over their loans up to six times but additional fees accrue each time they do so.
“Our Fresh Start Loan Program provides members access to small, short-term loans with reasonable rates and fees,” Hadsall said. “Our financial specialists will work with members to determine if this product is the right fit for their situation and to help them consolidate their existing payday loans so that they get out of the debt cycle faster.”
CU Community Credit Union plans to launch the following loan products in 2016:
- Payday Loan Alternative
- Credit Builder Loan
- Payday Consolidation Loan
- Title Loan Alternative
The Fresh Start Loan Program will give people in Greene and Christian counties the opportunity to build and repair credit, break the payday lending cycle, and consolidate their existing payday loans or other short-term loans that have high interest rates.
Participants can enter the program with no credit check, and CU Community Credit Union will provide access to mainstream banking services such as checking accounts with debit cards, online and mobile banking, and a network of nearly 30,000 free ATMs nationwide.
To help get the word out about Fresh Start Loan Program to those who may qualify, CU Community Credit Union has teamed up with the City of Springfield and several local non-profits, including Community Foundation of the Ozarks, Community Partnership of the Ozarks, Consumer Credit Counseling Services, Council of Churches of the Ozarks, Faith Voices for Southwest Missouri and the Ozarks Area Community Action Foundation.”
Read more at: KSPR