Nonprofit Lender Offers Alternatives To Predatory Loans In Illinois
A nonprofit lender is expanding to Illinois to offer low-income families loans with more reasonable terms so they can avoid predatory businesses and subsequent debt.
Capital Good Fund offers personal loans ranging from $300 to $20,000, helping families with varied emergencies such as vehicle repairs, security deposits and immigration costs.
The lender announced this month that it is now offering loans in Illinois. Capital Good Fund also provides loans in Delaware, Florida, Massachusetts and Rhode Island.
Over the past decade, Capital Good Fund has made 4,500 loans for a total nearly $10 million, saving borrowers $4 million in interest and fees, according to the lender.
The lender’s goal is to do 300 loans, totalling $1 million, in its first year in Illinois. Borrowers can complete an online application for a loan in 15 minutes.
“The issue of predatory lending … is a very endemic problem in the state of Illinois,” said Andy Posner, founder and CEO of the Rhode Island-based lender.
Car title loans in Illinois have some of the highest interest rates in the country.
The Illinois Department of Financial & Professional Regulation’s Division of Financial Institutions regulates and monitors payday lenders, currency exchanges and other similarly licensed entities. From February 2006 through December 2017, nearly 1.4 million consumers took out almost 9.7 million loans — an average of about seven loans per consumer, according to the department.
“We want to serve immigrants, lower-income folks and there’s clearly a demand in Illinois,” Posner said.
As someone is paying back the loan, their credit score increases. Posner said the average credit score jumps 90 points.
Capital Good Fund receives grants and money from the federal government. It also generates money from loans. The lender received $1.25 million from The Julian Grace Foundation and a $700,000 commitment from JP Morgan Chase to expand in Illinois.
The Resurrection Project (TRP) in Chicago is also a partner. A loan officer will work out of the community organization’s Back of the Yards office.
Veronica Reyes, vice president of community ownership at TRP, said the new lending service will help the families in its service area.
“We’re excited because access to responsible credit lending products for working families is really crucial to help meet their needs,” Reyes said. One example, she said, “families with real emergencies like a car breakdown to be able to get to work.”
“In the long run we want to establish good credit so eventually they can become homeowners,” Reyes added.