By Kevin Jenkins | January 12, 2023 | 0
Kraig Sutherland, senior vice president at First State Community Bank, recently presented Southeast Economic Development Fund (SEED$) with a check for $10,000 to be used for the Community Loan Center of Southeast Missouri’s (CLC of SEMO) loan fund.
Since establishing the small-dollar loan program in August 2020, the CLC of SEMO has made more than 200 loans to individuals.
“We are happy to be able to invest in our communities to assist businesses and individuals to grow and become more financially successful.” Sutherland said.
An alternative to predatory lending, the CLC of SEMO partners with local employers to offer qualifying employees the ability to borrow up to $1,000 at reasonable interest rates. The program is designed for borrowers across various income brackets and professions who might lack access to an emergency fund or traditional financing when faced with unexpected expenses.
As one borrower shared, “I had an emergency that needed to be taken care of and I had no other option but a payday loan which would have sunk me further into debt with their rates. The CLC loan was so very easy to apply for, it was quick, and it comes right out of my paycheck so I don’t even have to worry about paying it biweekly.”
The program allows borrowers to repay early — without credit checks, collateral, or prepayment penalties — and is structured to keep payments small and manageable. CLC loan payments are paid back through payroll deduction and are based on borrowers’ payroll schedules. Free, no-obligation financial education is available to any CLC borrower.
The CLC loan program is a national franchise building relationships with local community lenders, such as CLC of SEMO, across the country. CLC franchisees use their own lending capital and recruit participating employers locally. Franchisees use CLC branding and lending software, along with a package of lending services, such as loan processing, loan documentation, loan funding and loan servicing. CLC franchisees also receive CLC training and technical assistance through Texas Community Capital, dba: Community Loan Center of America, which serves as the CLC network coordinator.
There is no cost or risk to employers, and the program is reportedly easy to administer. Employers who sign up to offer the CLC program commit to notifying employees about the CLC loan program and make the program available to employees.
Usually, the CLC program becomes part of the employer’s package of employee benefits. Some employers report that the CLC loan program has helped reduce their employee turnover rate, as well as improved workplace morale.
Employers also agree to verify employment and verify income. As a loan payment method, payroll deduction reduces CLC loan charge-offs to the current rate of around 4.5% allowing the CLC lenders to charge a lower interest rate of only 18% and a $20 loan origination fee (21.8% APR based on $1,000 loan with a 12-month term) compared to average annual interest rates of 521% at traditional payday lending institutions in Idaho. Any proceeds that are generated from the interest on CLC loans are reinvested back into the loan program.
“…Being able to reapply once below half is a perk as well,” said a St. Francois County borrower.
SEED$ Business Development Coach Heather Garner said employees and borrowers give the CLC high approval marks because of the ease of getting a loan when they need it, and the convenience of automatic loan repayment through payroll deduction.
“Public and private employers view the CLC as a unique, risk-free addition to their employee benefit package,” she said. “Social investors support the innovative CLC loan program, which shows that loans to workers can be reasonably priced.”
Anyone wanting more information about the CLC, including how to bring the CLC loan program to one’s employer, can contact Garner at 573-431-4296
The Community Loan Center, a community-based alternative to payday loans, recently made CLC loan No. 100,000. Since its inception in 2011, the network of Community Loan Center local lenders has now grown to include 23 lenders located in 11 states. The Community Loan Center has loaned borrowers over $93 million, saving borrowers more than $77 million compared to what they would have paid to borrow the same amount in payday loans.
