Finance/Micro-Loan Programs

LILLI micro loans come to California June 2016

This topic contains 5 replies, has 4 voices, and was last updated by Profile photo of Judith Coleman Judith Coleman 4 months, 3 weeks ago.

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  • #591
    Profile photo of Susan Megliola
    Susan Megliola
    Participant

    Santa Barbara Dist Council has launched a systemic change micro loan pilot program to educate and convert predatory loans. Offering FDIC Smart money management budget classes (mandatory) and $1,000 max loans though a US Treas CDFI lending partner. Many thanks to Pat Hogrebe, Belleville IL and Matt Pogor, Austin, TX for sharing their loan programs.
    The pilot will operate in one of the 9 LA Council Districts and hopes to expand after a one year test.

  • #699
    Profile photo of Deb Zabloudil
    Deb Zabloudil
    Participant

    Now that your program has been running for a year, what have you learned? Any best practices that you’d like to share?

  • #700
    Profile photo of Judith Coleman
    Judith Coleman
    Participant

    One size does not fit all. We are a small conference located in a small, relatively affluent (on the surface) area – Cape Cod. There are numerous social services available to our clients also. Most would not think of themselves as poor as they are able to live from paycheck to paycheck. When they miss a paycheck, they come to us and many are back to “normal” after our help, until the next paycheck is missed. Generally that is a couple of years later.

    We initiated the program by depositing $22,500 in a local credit union to be used as collateral against the loan granted. Since Dec 2013, we have given out 14 loans, totaling $26,400. The loans have ranged from $500 to $5,000. They have been used for items not normally under the umbrella of SVdP payments – housing/utilities. The loans have been used for such things as to purchase vehicles, pay for funeral expenses, taxes, post high school tuition and inventory for a business. We are currently working on 2 additional loans – one will help a young couple bring their credit score up to a point where they qualify for better mortgage conditions in buying their first home and the other is to consolidate a lot of small, high interest debt into one manageable monthly loan payment. Thanks to repayments, we can issue another $7,700 in loans without having to add more capital to our account.

    Requests for loans come to us via the Visiting Vincentians. When they do a visit, they go beyond the original request to get a whole picture of the situation. Our loan committee is interested in only two things – does the client have the financial ability to repay the loan and do the VV’s feel the client has the moral integrity to do so. To date, we have had only one default. The amount defaulted was $428.

    As you can see, we are not using the lili program as it was intended – payday loans are not an issue here. Our focus has been to make a permanent difference in the client’s life. We have learned that guidelines, common sense and looking at what the end result of our granting the loan will be, works well.

  • #701
    Profile photo of Bill Meath
    Bill Meath
    Participant

    Hello Judith Coleman. We are just starting a micro loan program in Illinois. We have a cooperating bank and are collaborating with the credit counselors in our area. We’ve applied for funding through a local foundation. We’ve put together a loan committee and are in the process of putting together the ‘application materials, guideline etc. Could you share the documents or whatever other information you may have? My email address is hopetakesaction@gmail.com

    Thank you so much and may God continue to bless all your endeavors.

  • #702
    Profile photo of Judith Coleman
    Judith Coleman
    Participant

    Wow! That would be wonderful if you can get a local foundation to fund your program.

    We actually do not have any sort of special application materials. Our Visiting Vincentians collect complete financial data during their home visit using the normal Client intake form. Generally the call to us is for help with rent or a mortgage or for utility payments. If the call is for something else or if the VV’s notice that the clients need some financial restructuring or need to get a specific problem or debt taken care of, they bring this information to the board before even mentioning the possibility of a loan to the client. As 2 of the 3 loan committee members are also board members, they get to see the whole picture though the VV’s reports. The 3rd member of the loan committee is a “reality check”.

    I am assuming that the client intake form is generic. If not, this is the info we gather for every client visit:

  • #703
    Profile photo of Judith Coleman
    Judith Coleman
    Participant

    sorry hit the wrong button –

    Name, address and phone number of client.
    Names of others in the household as well as the children’s ages.
    Source, amount and frequency of all income, whether taxable or not. We also ask about the feasibility of continued employment or increases in pay.
    Financial outlays of household – rent/mortgage, utilities, food, clothing, loan payments, insurances, cable/internet, transportation costs, child support, alimony, tuitions.

    With the above info it is easy to see if the client could afford to repay the loan or if some consolidating is needed. Also while collecting the info, the VV’s have the opportunity to get an idea as to the client’s attitude towards their financial situation.

    Sorry I can’t be more precise but we have always found when dealing with matters of systemic change, we are dealing with a bag of water rather than an ice cube.

    May God bless you and your family also, Judy

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