Finance/Micro-Loan Programs

To Bill – meeting with bank

This topic contains 7 replies, has 5 voices, and was last updated by  Deb Zabloudil 2 years, 8 months ago.

  • Author
    Posts
  • #676

    Judith Coleman
    Participant

    To Bill

    We contacted all the regular banks in our town to no avail – micro loans are not considered profitable by mid-sized and large banks. We finally got a credit union to partner with us. Stress “community outreach” in your discussions. Also stress that the people you are sending are people who probably have never used a bank for checking or savings and could develop into a good customer. The biggest argument you will hear against partnering with you is the cost to process the loan. Counter that with the fact that the people you are sending do not need to go through a credit check as everyone knows that their credit is bad and by your putting up cash as collateral for the loan, the risk to the bank is zero, nada, nil, zilch!

  • #677

    Judith Coleman
    Participant

    I just re-read you message and saw that I did not address your question. Once we established the relationship, we opened a savings account with the credit union. When we have an individual who we want to loan money to, we go to the credit union and give the name, address, amount of loan and repayment terms to the loan officer who has us sign a document which allows the CU to use our funds for repayment in case of default. The client goes to the CU and opens an account with it – generally $10 with suffice – and fills out the regular paper work. The loan is issued in the client’s name and payments help to improve his credit rating. As payments are made, the amount available to us to lend is increased. We are a small conference. We committed $19,500 to the program, have lent out $19,200 so far and have over $7,000 available for future loans. We have had only 1 default, in the amount of $428, so we are pleased with the results and hope to expand the program to benefit some of the people who will be going through our “Gettin’ Ahead……” program.

  • #678

    Bill Meath
    Participant

    Hi Judith,
    Thank you fro your response, it is very helpful. Do you have the client got through any Financial Literacy / Money Management education?

  • #679

    Judith Coleman
    Participant

    Hi, Bill

    Yes and no. Our main concern when granting a loan is the client’s ability to repay it. While we don’t insist that they participate in a financial literacy program, we strongly urge that they do to prevent their getting into the situation in the future.

  • #680

    Deb Zabloudil
    Participant

    Bill, we are just getting a microloan program off the ground. We require that everyone who gets a loan through our program meets with financial mentors monthly. We use the Consumer Financial Protection Bureau’s program You Money Your Goals. It’s an empowerment program so it does not demean the person we are mentoring. There are 14 financial topics meant to enhance a person’s knowledge of how different aspects of the system work making them a more empowered user of the financial system. They offer online training to train the trainers. It’s also a useful tool if you want to do some follow-up mentoring through home visits.

    One of the reasons we insist on the meentoring is to build a sense of community with those we serve and to do everything we can to make sure they succeed. Let me know if you have any other questions.

    Here’s the link. We use the community volunteer resources http://www.consumerfinance.gov/your-money-your-goals/

  • #681

    Suzanne Wilhelmi
    Participant

    So Deb, do you then offer SVdP financial mentors. If so can you explain more how this works in your Conference with the people you serve? We have recently been considering this in our Conference.

  • #682

    Tom Mulloy
    Participant

    Hey Everyone,

    Apropos of this conversation and Deb’s comment on the CFPB “Your Money, Your Goals” toolkit–I got an invitation yesterday from the CFPB for a webinar about this toolkit. See below, if you’re interested. The toolkit is free to download on the CFPB website if you’re interested in poking around and seeing what it looks like.

    Happy New Year to all,

    Tom Mulloy
    National Director of Poverty Programs
    tmulloy@svdpusa.org

    —————————————————

    You are invited to participate in a Your Money, Your Goals webinar on our latest resource: Behind on Bills. This webinar will provide an overview of the new resource and how you can use it with the people you serve.
    The webinar will be held on Wednesday January 25, 2017 from 1:00 p.m. – 2:30 p.m. ET.
    To join, please visit: http://bit.ly/2hp2l4d
    • Call-in: 1-866-546-3377
    • Passcode: 4280284458
    Behind on Bills is a compact resource with eight tools targeted at income and expense tracking and managing bills. The tools were created to be photocopied and used in one-on-one meetings and conversations. Each pull-out tool is designed specifically in black and white, to make photocopying easy and convenient.

    • #683

      Deb Zabloudil
      Participant

      I visited all the conferences in this county (we are having to develop partnerships by county with different Credit Unions), and asked for volunteers to be financial mentors. We have a 3 person local board of Vincentians who oversee the loan program now in that county and they are recruiting and training additional mentors. I don’t think it’s a requirement that they have to be Vincentians, but we will want all mentors to do our financial mentor training, Ozanam Training and Bridges out of Poverty training. It’s a lot, but you really don’t want someone representing your organization who doesn’t understand and support your belief system.

You must be logged in to reply to this topic.