Machi Navi
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Laddie Cross, a business and loan specialist for the Southeast Economic Development Fund Inc. (SEED $), is a retired banker who said that while many might be tempted to look to a payday loan for a solution fast, it could actually make their financial problems worse. to the extent that the interest payment is on top of the amount of money they are paying back.
Sarah haas
As COVID-19 declines and federal and state stimulus payments dry up, debt continues to rise for many as they return to work amid rising prices and stagnant wages.
Laddie Cross, a business and loan specialist for the Southeast Economic Development Fund Inc. (SEED $), is a retired banker who said many might be tempted to turn to a payday loan for a quick fix that, according to them, will pass them to the next paycheck. .
But, in states like Missouri, which lightly regulates predatory lenders compared to other states, those borrowers could face charges equivalent to 463% for short-term loans.
Late last summer, SEED $ began offering a program that offers borrowers an alternative to predatory lenders. Launched in July 2020, the Community Loan Center of Southeast Missouri (CLC) is a low-cost employer-sponsored loan program offered by participating employers in the East Missouri Action Agency (EMAA) service area. In fact, EMAA is one of the participating employers.
“Someone may have a car repair they don’t have money for at the time, or someone needs to take their family on vacation and wants the extra funds,†Cross said. . “We have had employees who renew their loans, pay off the original loan and take out another. “
Cross said the interest rate is a fraction of that charged by payday loan companies on a loan of up to $ 1,000, and that the loan is expected to be paid off within a year. The loan amount is determined in part by the borrower’s salary – it cannot exceed 50% of a monthly salary, so if someone earns $ 2,000 per month, they can borrow $ 1,000.
