Brightpoint To Offer Loans To Aid Families
FORT WAYNE — Brightpoint is trying to break a cycle that traps the working poor.
The local nonprofit on Thursday announced plans to establish a consumer loan program with an $826,000 grant from JPMorgan Chase & Co. Additional local grants and donations will bring total funding to $1.3 million.
By authorizing loans of up to $1,000 for up to one year, Brightpoint hopes to help some local families deal with household budget shortfalls without turning to payday lenders.
Payday lenders create a “debt trap” for borrowers by charging as much as 365 percent annualized interest on loans that last just two weeks to one month, said Andy Fraizer, executive director of the Indiana Association for Community Economic Development.
Brightpoint’s Community Loan Center will charge 18 percent interest and a $20 administration fee on each loan. No penalties are assessed for prepayment.
The significant restriction on the loans is that the money is available only through participating employers, who will deduct loan payments from the employee’s paychecks.
Borrowers have to be on the job – either full time or part time – at least three months. No other criteria, including credit score or collateral, must be met. Loan amounts are limited to 10 percent of an employee’s annual pay.
Employers, who can participate for free, benefit from reduced employee stress and increased workplace morale, loan program officials said. Any employers interested in the program should contact Brightpoint.
Any worker interested in a loan should contact his employer’s human resources office and encourage officials to call Brightpoint.
Steve Hoffman, Brightpoint’s president and CEO, said no employers have signed up yet, but a few have been contacted and expressed interest. His organization learned it would receive the funding only two weeks ago.
Chase is making a similar donation in the Lafayette market next week. Fraizer, who is based in Indianapolis, is working to find more donors who will help his organization expand the program to more areas in the state.
Payday lenders collect more than $70 million in annual fees in Indiana alone, according to data provided by Brightpoint. Indiana doesn’t limit how much interest such lenders can charge, Fraizer said.
Formerly known as CANI, Brightpoint’s mission is to help “communities, families, and individuals remove the causes and conditions of poverty.” The nonprofit also provides some small business loans.
Jim Cook, Chase’s northeast Indiana regional president, participated in Brightpoint’s announcement Thursday afternoon at the nonprofit’s downtown Fort Wayne office.
Chase made the grant, he said, because the New York-based financial services provider emphasizes lifting up neighborhoods and helping people who are economically challenged.
“The challenges facing our communities require solutions tailored to their specific needs,” Cook said in a statement. “Brightpoint is developing innovative strategies for the needs of Fort Wayne-area families that will connect them to greater economic opportunities and prosperity.”
Source: Journal Gazette