The $20.83 Loan Red Flag

Just Economy Conference – May 7, 2021


The number of Americans aged 62 and older using payday lending has tripled in the past five years with annual percentage rates as high as 372%. In response to this staggering figure and the desperation resulting from COVID-19 in 2020, HUD-approved housing and financial counseling agency, Empowering and Strengthening Ohio’s People (ESOP) launched a 0% interest, no-fee Senior Small Dollar Loan for people aged 55+. Backed by funds from bank partners, the loan ranges up to $1,000 and is designed to help older adults weather COVID-19 financial hardships without getting trapped in the vicious cycle of payday loans. ESOP’s zero-interest loan can be used for rent, mortgage payments, property taxes, insurance, home repairs, utilities, transportation, medication, and other basic needs. To break the payday lending cycle, borrowers also receive financial capability (knowledge, skills and access to resources) including one-on-one financial counseling for help in decreasing expenses, increasing income, budgeting, benefits enrollment, matched savings, free income tax preparation, behavioral health services, and more. But a troubling red flag is that today 67% of the applicants get declined because they can’t afford to pay back the loan principal at a maximum $20.83 a month over four years. The fact that prospective older adult clients don’t have enough income to pay on a $1000 zero-interest loan over 48 months is an indicator in and of itself of the challenges our low-to-moderate income seniors face. This session will tell you how ESOP approached bank partners for help launching this loan, what is working with the program, and what changes we are making to serve more older adults in 2021 based on the lessons learned so far. ESOP will share our findings as we endeavor to answer the question: How can we provide older adults with immediate financial relief and also improve their long-term financial capability?


  • Karen Kali, Senior Program Manager of Special initiatives at NCRC
  • Michael Billnitzer, Executive Director of ESOP
  • Antoinette Smith, Director of Housing and Financial Counseling at ESOP
  • Jacqueline Moore, CEO and President of Faith Community United Credit Union


NCRC video transcripts are produced by a third-party transcription service and may contain errors. They are lightly edited for style and clarity.

Kali, 01:07 

Hello everyone and welcome to the Just Economy sessions part of NCRC’s annual just economy conference. I’m Karen Kali, Senior Program Manager at NCRC and I’m excited to be here with you today. It’s May and that makes it Older Americans month, so happy Older Americans month to everyone as well. Today’s session, “the 2083 loan red flag” is part of our Age-Friendly banking convening series. The first session of the convening took place earlier today with the session, “Promoting economic equality in later life through innovative solutions and programs,” and I hope folks were able to catch that session. Recordings will be made available if you missed it. Both sessions are brought to you today in partnership with JPMorgan Chase.

We will now continue the conversation with an in-depth look at a successful local program. Many older adults like everyone else face emergencies, they face hardships, and they end up needing perhaps a small-dollar loan to assist with a payment or prevent some sort of impending financial crisis, whether it be health-related, home-related or even COVID related. So Aesop, or empowering and strengthening Ohio’s people, one of NCRC members sought to tackle both the need for emergency Lifeline as well as the problem of payday lending and low to moderate-income seniors through an innovative and a collaborative partnership with both a bank and a credit union. Today’s presentation features Michael Billnitzer, executive director and Antoinette Smith, Director of housing and financial counseling both from Aesop, as well as Jackie Moore, CEO and president of Faith Community United Credit Union. Please be sure to check out their full BIOS and connect with our presenters on the conference platform. Before we officially get started, if you have any questions throughout the presentation, please put them in the chat. We’ll retain the last 10 to 15 minutes or so of the session today for q&a. So please feel free to ask away. And also it’s great to know where folks are coming from today. So please use the chat to say hello and say a little bit about who you are, where you’re from, and if applicable, what you’re doing to help older adults thrive in your community in honor of older Americans month. And with that, let’s begin. I’ll turn it over to you, Michael. 

Billnitzer, 03:18 

Thank you so much, Karen. It’s a pleasure to be with you. Good afternoon, NCRC just economy conference. Happy Friday, and I hope you’ve enjoyed the conference. So well. It’s an honor to be here and presenting on behalf of empowering and strengthening Ohio’s people. Our parent organization, the Benjamin rose Institute on Aging, and faith community united credit union, we’re going to be talking about a program we created in response to COVID-19 called the $20.83 cent red flag. This is Aesop sr, small dollar loan program. And I think it will become apparent what the red flag title is for and what that’s alluding to as we move through the program. So again, my name is Mike Bellman, sir. I’m the executive director of Aesop also vice president of our parent organization, Benjamin rose Institute on Aging. I’ll be joined by our partner on this program and colleague Jacqueline Moore, who is the president and CEO of faith community united credit union, which is a local community development finance our statewide community development financial institution, located locally here in Cleveland, Ohio, Northeast Ohio, also be joined by presenter Antoinette Smith, who is Aesop’s director of housing and financial counseling. So our objectives today is to give you an overview of who we are, who is Aesop what qualifies us to put on a program like this. So I’ll give you a little bit about our history and how we went from inception of the organization to serving low to moderate income older adults. I wanted to give you a profile of the older adult as a client because they don’t always present the same way. As clients of other ages want to share with you the financial impact of covid 19 on the older adults that we are seeing, and what this senior small-dollar loan program is specifically, how it works, what we have learned since we started and we started this program in July of 2020. We’ll share some lessons from that the impact and outcomes of the program. And as I mentioned, the lessons learned. So before we start out and get into Aesop in the senior small dollar loan program, I’m hoping you’ll keep these questions in mind for consideration throughout the presentation. And the first one is if you can think about the last time you spent $20. For most people, for most people, $20. Spending something whether it’s an expense or it’s discretionary, is usually not a big deal. So think about the last time it was at a pizza was in a movie with your family. Maybe you rented a movie, since we’re all sheltered in place or have been in the thing about did it cause you any stress to let go of that $20? Was there was there any anxiety associated with it as you have to make any life-impacting decisions to spend it? So if you keep those questions in mind as we go through, it might help you understand and empathize the struggles to clients that we are seeing are dealing with. So a little bit about Aesop. Aesop stands for empowering and strengthening Ohio’s people. We are a nonprofit, HUD approved housing and financial counseling agency in Northeast Ohio. We have a staff of 13, in our subsidiary of Benjamin rose, and all nine of our housing and financial counselors are individually HUD certified. And I’m very proud of that. Our mission is to help adults in all stages of life achieve and maintain financial wellness and housing stability. And we see those two things as inextricably related. You can’t if you don’t have financial wellness, you’re not going to have housing stability. And if you don’t have housing stability, whether that’s renting, or whether that’s owning your own home, or you have a loan, and are in pursuit of owning your own home, you’re probably not going to have financial wellness. So we tackle both of these things together. And ultimately, and hopefully give our clients financial capability. And I’ll talk about what that definition is in a little bit. Aesop’s vision is a community in which everyone has economic opportunity, a safe place to live and financial stability. That’s what we strive for equal opportunity for equal economic opportunity for everybody. As I mentioned, we are a subsidiary of the Benjamin rose Institute on Aging, whose mission is to empower caregivers and people of all ages to age well through research, consumer responsive services, and client advocacy. So the other subsidiaries within Benjamin rose, he stops housing and financial counseling, we have a subsidiary called the row centers for aging well, which focuses on basic needs for older adults, home-delivered meals, which is very much needed right now. And congregate meals and anon COVID-19 year, as well as addressing social isolation through community-based organizations in the community where older adults congregate, and can can develop relationships and cohorts with each other for social isolation, and feeling connected to the community. We also have a subsidiary called the eldercare services Institute, which deals with behavioral health issues for older adults. So thinking about the psychological and emotional wellbeing for older adults, and then we have a subsidiary called the row centers, or I’m sorry, the Center for Research and Education, which is an applied research organization staffed with a few PhD scientists who specialize in gerontology gerontological issues. And what they do primarily is help programs identify help create and develop programs and test them whether they are evidence-based or evidence-informed and are truly having an impact on our older adult population and caregivers. So a little bit about our history and what qualifies us to do this work and what took us from the beginning to now. We were founded in 1993. On the east side of Cleveland, we were first the east side organizing project. And our first mission was established by our founder I Ned Killingsworth and that was to develop organized leadership around issues that impact neighborhood life. We felt that members of the community are in the best position to change the quality of lives in the community. So we would develop leadership in neighborhoods. And the first issue that we took on as, as a neighborhood issue was wild dogs, wild packs of dogs were roaming the streets in Cleveland, particularly where our founder lived, the union mile section of town. And older adults couldn’t walk to school, say older adults couldn’t walk to church in the store safely, or kids couldn’t walk to school, safely, safely. And so by organizing the neighborhood to put pressure on City Hall, we were able to get an additional dog catcher hired and off went the east side organizing project. And we address issues like client crime, blighted housing, drugs in the neighborhood, throughout the 90s. Around the turn of the century, around 2000, as we would have membership meetings, we realized that membership was dropping off. And we couldn’t figure out why. As we investigated this, we realized that our members were being foreclosed upon due to predatory lending. And so we took this on as an issue. And as we took on this issue, we invited banks to partner with us to address this and help to help keep people in their homes and work together. Some banks were great, they came on board, right away, and other banks were didn’t feel they were part of the problem. And so excuse me. And so by putting direct action community tactics, on banks, excuse me, we’re able to bring them to the table to partner in the process. And so we work together to establish a process to keep people in their homes. And this was before the foreclosure crisis. But by establishing this process, we were able to open 10 offices statewide, and ultimately serve 55,000 homeowners across the state of Ohio. As the foreclosure crisis started to wane, we stopped and looked at our data and recognize a couple things. We noticed that 40% of our clients that we had helped to avoid foreclosure, were 55 and older, at a time in their lives, when they should own their own homes, and should not be thinking about at being at risk of foreclosure. They were indentured servants to their mortgage. And we thought this was was wrong. And so we took that into consideration. The other thing that we noticed at that time was that what we were doing was inherently reactive foreclosure prevention counseling, which is what we staff to do to partner with banks at the time and work on a modification process to keep to keep members of community in their homes and avoid foreclosure. As we staff that, we recognize that what we were doing was inherently reactive. If somebody is coming to us in foreclosure crisis, they’re already in crisis, how do we get more preventive to help people stay in their homes? So that was another approach that we took and looked at in 2012. As we started to think about, how can we help more people more older adults stay in their home, we also have listening tables with older adults to understand the issues that they’ve were verbalizing that they were facing. And they told us loudly and clearly that they didn’t feel like they could age in place with any kind of economic stability. They knew they were going into or went on to a fixed income after they had retired and didn’t have much flexibility economically. So as a result of this, we launched something called the senior Financial Empowerment initiative. And this is an integrated and holistic suite of services designed to help older adults age in place, and I’ll talk about those in just a second. And since 2014, e SAP has been able to assist over 25,000 older adults through our senior financial empowerment, initiative to age in place. And as we started working with older adults on our new programs, we started with workshops in the community to increase education. And we would bring people in for financial and housing counseling to give them skills. And also do things like provide benefits assistance checkups, to give them access to resources as an access to conventional banking products. We would give them knowledge, skills, access to resources to help them become more capable, financially capable. So as we started to do these workshops in the community and counseling, but we caught the attention of this organization called the Benjamin Rosie Institute on Aging whose mission is to serve older adults and their caregivers. And so we emerged in 2017. We were the missing piece to what they had they were doing basic needs and socialization and congregate meals, and also behavioral health. The missing piece was housing and financial. So we merged. So what Aesop looks like today, we’re really divided into two divisions, we have one division that focuses on housing programs. And it can be reactive crisis-oriented housing programs, like foreclosure prevention, or it can be proactive, we can focus to help older adults who recognize that they can no longer age well in the house that they have and help them transition into something that’s more affordable or right-sized for them. So that’s more of a proactive approach. On our financial counseling programs, same thing, you can see that the suite of services that we have, and again, we really focus on providing knowledge, skills, and access to resources. Most of the clients that we see are a lot of clients that come to us come to us in crisis, they might be at risk of foreclosure, because mortgage, they might be at risk of foreclosure because of property taxes. But we ultimately try to give them education skills, access to resources, to help them better age in place with financial stability. And so our model, if you look at and I’m going to give you some data from 2019, and 2019, our average client income was 1600 $87 a month, and that’s just about $20,000 a year, this was actually a high-income year for our clients, usually it’s around $15- $16,000. But through our model, we were able to help our clients decrease debt by 30 $600. On average, we were able to decrease monthly expenses. By $373, we were able to help them save $402 on average, and less they were in our matched savings program. And if they were then they were able to save 1000 $50,012 in savings in emergency savings. And we were able to increase on average credit score by 34 points. So if you think about these numbers to the average American, these are not, you wouldn’t, you might look at these and say they’re not drastically significant. You know, this is not a big savings. But when your income is $20,000 a year, you can reduce debt by 30 $600. Decrease monthly expenses by $373 have an emergency savings account of $1,000, which most Americans 80% of Americans don’t have an emergency savings, or can’t withstand that kind of financial shock. These are game changing numbers to older adults on fixed incomes and help them not to have to make decisions between things like am I going to buy groceries? Am I going to buy medication, am I going to pay my rent and utilities, and these are the daily issues that we see with the older adults that we serve. So again, I would just recap. Our goal is always to provide financial capability, financial education, financial literacy is a big thing. It’s an important thing to provide education, but that’s about what you know. And really what we want to be able to give our clients actionable, actionable items and skills. We want them to be able to apply what they use so they can actually change behavior and change their lives. So knowledge skills, access to resources, is our equation for financial capability and it’s a guiding principle in everything that we do. So I’m going to turn it over to Antoinette Smith, our Director of housing and financial counseling to give you the profile of the older adult as a client, Antoinette. 

Smith, 18:45 

Thank you so much, Mike. And as Mike stated, I am Antoinette Smith. I’m the director of housing and financial counseling for Aesop. And when we began our focus on older adults, we found that financial insecurity among older adults was something that we needed to address. And so in studies, we found that 32% or 32% of people ages 53 to 62, have no money saved for retirement, okay. 57 million Americans don’t have the savings to cover a $500 emergency, we found that 30 30% of seniors experience a zero or negative budget every month after paying for their basic needs. And what’s really important about this is that we noted that some don’t even have the funds to pay for their basic needs. And so in that study, we found that that was, you know, pretty important. So next slide, please. In regards to what does an Aesop client look like 78% of our clients are female. 66% of our clients are African American. They earn an average, as Mike said of $1,687 per month. These clients live alone and are often socially isolated. And many were victims of payday loans or are in a payday loan cycle. They are typically between the ages of 60 and 80 years old, but our average client is 65 years old. They have high debt, they have or have been victims of fraud and scams, they have little to no equity in the home that they live in. The home is in need of repairs and accessibility modifications. So as an example, we had a client who was concerned about their hygiene because they were afraid of going or getting in and out of the tub due to a fall risk. And so we have many of those situations with our senior clients. Our clients have delinquent property taxes or at risk of foreclosure. As we said before, they don’t have any savings. They are challenged with increasing health care costs, and rarely present with one problem. So they typically come with complex problems. Next slide, please. And so what is the SR, small-dollar loan, and what brought us to this 2883 loan red flag and so the small-dollar loan was created as a covert Response Program, and may Tamir our senior property tax loan. And so Cuyahoga County was the epicenter of the foreclosure crisis. And so Aesop partnered with third Federal Savings and Loan along with faith community united credit union to design a loan product that would assist helping to decrease property tax foreclosures. So the senior property taxes loan is a 0% interest loan. It’s designed to help clients 55 and older with property tax problems or issues, the client can loan a minimum of $500, or maximum amount of 70 $500. A requirement, of course of this loan program is mandatory financial counseling. And so to help the client become more financially stable, next slide, please. And so because our seeing your property tax on program was successful, we then got together with those same partners to develop the senior small dollar loan that would assist clients with basic needs in response to COVID-19. So as I stated previously, we wanted to develop a loan product that had some of the same components of our senior property tax loan. So the small dollar loan is a 0% interest loan for clients that are 55 and older, the client amounts the amounts that they can borrow range from 300 to $1,000. The client, this loan can also be coupled with our senior property tax loan. And so we had a client who was delinquent on his property taxes, but also needed homeowners insurance. And so we coupled the two loan programs together to make it affordable for the client. The loan term is zero to 48 months making the maximum payment $20.83. This loan also has a requirement of mandatory financial counseling to help the client again become more financially stable. Some of the long uses are mortgage rent, insurance, taxes, utilities, transportation, medications, and groceries to name a few. Now, I’m going to actually turn this over to Jacqueline Moore to give you some information about faith and how they partner with Aesop. Take it away. 

Moore, 23:50 

Thank you, Antoinette. I’m Jacqueline Moore, the CEO of Faith Community United Credit Union. We are one of the largest minority-owned credit unions in the state of Ohio. We partner and work with organizations such as Aesop, third federal, and other organizations to help underserved communities. When this program was bought to faith. We were excited about it. We were also doing some of the same type of programs. Our credit union is 70 years old, but we will be in February. So this has been our calls and five for many years. The credit union model is people helping people. We are in an underserved area that was top heavy with payday lenders. We came together and brought a program for payday lenders to just stop it our help our members who were losing their whole paychecks. They were so far in debt just on payday loans alone. We decided to come up with our own plan to stop predatory lending. So again, Aesop came and say they would like to partner with faith. We too jumped right on board. The members the individuals. At Aesop, their clients have to be members of faith, you have to have an account at Sage $50 is given as a grant, from Aesop to each individual that job. Once you deposit the $50 on hand with faith, you are a member of the credit team that opens their clients up to all our membership off. We also offer the credit counseling, we have a savings program. So we want them to save and hope that once this period is over you have saved from your small dollars $20.83. Just deposit the change in the dollar, whatever you can put in, per pay, just put in something and watch your savings grow. Aesop will send us over all the paperwork via electronic processing, we will open up the account make sure the documents are signed, we return everything back to Aesop, we receive it back in electronic signature. So the senior is not even inconvenience for having to come into the office. This can all be done via online, not coming into faith at all. So that works well, especially during times. Like we’re in now dealing with a pandemic. The bills are paid directly to the credit. Sorry, the creditors know, the client received none of the funds. So we made sure that the checks are paid out according to what they were supposed to be. And then there any differences or they’re getting money cards. Aesop will take care of that have, they’ll come in, get a check cashing and purchase food cards, if that’s what the individual needs. So the program is working? Well, as of today, we have only had one loss, save has no risk. We’re here to help service the community. If there is ever lost, the individual loses all their income or whatever may happen. Third, Federal Bank has partnered with faith with shares on hand and deposit with us that they will pay that debt off so that there’s no loss to Aesop, there’s no loss to faith. So third, federal even partners to make sure that senior is surface if a loss occurs. And again, so far, we’ve only had one loss, and that is great. This is an excellent program. And I’m glad that we are a part of it. And we’ll hope to see it grow even more. As I said, again, faces here, we’re open to anyone who lives works, worships or attends school in Cuyahoga County, you’re eligible to join. And we reach out to these clients, to bring them into our family, and help them as much as we can. And we’ve even had a few of these soft clients, bring their children, grandchildren to come and open accounts. And then we would know that we’re helping generations of that family to come. So again, we really believe in the program, and we just hope it works. For even more, if anyone is interested in doing it for your communities, it can be done. So now I’m going to turn it back over to Michael, thank you. 

Billnitzer, 29:04 

Thank you so much, Jacqueline. I would highly recommend as we go through this and use if you’re thinking about doing a program like this, considering partnering with a local community development financial institution, Faith has been an amazing partner and is very committed to community. So thank you, Jacqueline. So I’m going to talk a little bit about now the loan impact and outcomes what we know and what we’ve learned so far. So by the numbers, if we’re looking at this loan, again, we started this program in July, we’ve had 64 applications. We’ve approved 28 of those applications. 36 either declined or withdrew and as Jacqueline mentioned, only one was charged off and that tells us that it’s performing it’s working. If you look back at our demographics like Antoinette was touching on about the profile of an Aesop client. This mirrors that exactly females are 69% males are 30 1%, the average age of a client that’s seeking a loan is 65. You’re looking at the loan itself. So this again goes up to $1,000, the average loan has been for $825. And the average gross monthly income, again, is now we’re under $15,000. Annually, they’re at 1231 a month, there you go $14,772 a year, the average loan payment is $23.74, on those loans that have been issued, and the most frequent loan term, again, can go out to 48 months is 36 months what clients are selecting. And if you look at the average beginning credit score, it’s $575. So what that tells us you just look at this data, that’s a client that is on that income, and that credit score is highly unlikely to be able to get an emergency loan from a bank. So thankfully, we have organizations like faith and CDF eyes, in the community. The other piece of this is, this is the profile of a client who, who is if they’re desperate, because they have an a financial emergency, and a hardship is likely going to turn to payday lending. And so in our model, I would point out one other thing as Antoinette shared, we make financial counseling mandatory. And if you think about said said earlier, trying to get people financially capable, that’s our goal, address the crisis, get somebody out of crisis with this, get them capable through knowledge, skills, and access to resources. And you do that through financial counseling. And I would point out one other thing that was part of the problem in the foreclosure crisis, there was great relief, but there wasn’t mandated financial counseling at that time. So that’s what we’re trying to do with this program. In terms of the loan usage, these are the reasons people are seeking alone. Rent 35% are going towards rent, utilities 19% credit or debt 19% groceries 15%. Any kind of housing need, whether that’s to make a payment, or they have an emergency repair is at 12%. And insurance needs are 4%. The reason for the declined loans 26% withdrew. But this is the one that’s troubling to us. 21% felt the loan was unaffordable, they couldn’t afford $20 a month 16% are still in process, and we’re evaluating 13% had no COVID hard COVID related hardship 13% the income was too high, and 11% had financial needs that exceeded the loan significantly. So the lessons learned from this. This is a pilot phase, our goal is to do 50 loans and see where we can improve this what lessons we’ve learned, we shared so far, what we’re learning from this, we’ve learned that female African American low to moderate income older adults, as the biggest percentage of our clients don’t have $20 a month discretionary income to spend on emergency loan. So it goes back to that question at the beginning. When’s the last time you spent $20? And was there stress related to it did you have to make a life-altering decision in order to spend that $20 these people do. And that goes to a bigger societal problem that we have to look at. We recommend if you’re going to launch a program like this to thoroughly assess and verify hardships, we do that by having two reviewers. At three actually, the counselor takes does the intake on the loan application, Antoinette as the program director reviews it and sends it to me as the executive director. So we’re always having multiple sets of eyes on what the hardship is on is affordable. As we share 25 of 26 loans so far are performing and current. And we’re very proud and happy to see that. Another big lesson for us is this is an alternative to payday lending while building financial capability as I shared. It’s, as you all know, on this call, payday lending is just insidious, and we need to break that cycle as an alternative, out of desperation. It’s an alternative to a conventional loan as I shared so if someone doesn’t qualify for a conventional loan, we certainly can give them this build credit help them establish credit to qualify for more mainstream products. The counseling component helps clients become more financially stable. It also gives them access to wraparound services. So if a client comes in for a loan that’s an older adult, one of the things that we are going to do is screen them for a benefits assessment to see if they have entitlements that they qualify for that they’re not utilizing and that recoups additional dollars into their budget helps stabilize them. We’re a volunteer Income Tax Assistance site so we can file taxes for free, unqualified members of the community. So that’s another service where we can help clients save, desperately needed dollars. As mentioned, this builds credit. And the other lesson, one of the biggest takeaway takeaways is if you are going to launch a program like this partner with trusted lending institutions, faith community united credit union, as we said, throughout this presentation, is just a pillar and mainstay in the community and a trusted one at that. Third, Federal Savings and Loan who actually backs the loans, they put the financial dollars up to two as collateral for the loans. They were one of the first partners when the foreclosure crisis hit for Aesop to come to the table. willingly didn’t, you know, didn’t have to prod them or use community organizing, they recognize community stabilization is critical. And we’re entering a crisis here. And they have been fantastic partners, since the beginning of the foreclosure crisis to date. So those are the lessons that we’ve learned from this, and we are absolutely still learning and look forward to sharing additional lessons as we continue the program. With that, I’m going to turn it back to Karen Kelly, for any questions, and I am going to stop sharing my screen.  

Kali, 36:30 

Thanks, Michael. Thank you, Michael Hanson, and Jackie, for telling us about this program. You know, payday lending has, it’s designed right in a way to sort of trap folks in cycle of debt. And we didn’t touch on this. But I think that it’s worth mentioning, you know, the average age of kind of cognitive decline is around age 60. Now that the average doesn’t mean everyone. But one of the first aspects of cognitive decline that may wane tends to be financial capability. And you take that and sort of pair it with predatory the predatory nature of payday loans. And then you add in, you know, fixed incomes and seniors, and that’s all just a very potentially toxic could be a potentially toxic out for LMI seniors. So clearly, you know, programs like this, a small-dollar loan program can certainly be beneficial for many seniors, there were a couple of clarifying questions they just want to get to quickly before. And folks, please feel free to keep those questions coming. I’ve got a couple myself, but some of the clarifying questions were Can you describe the loan guarantee structure again, didn’t quite catch the details in the relationships? And then there was also a question about what are some of the leading reasons that people are being declined or withdrawn? 

Billnitzer, 37:52 

Okay, so answer that you want to start that out in terms of, I’m happy to take it. 

Smith, 38:01 

Sure. The main reasons for decline are is essentially that the client doesn’t have the surplus income, they just don’t, they just don’t have it. And then the withdrawal reasons is that they looked for, or found another avenue. So in other words, they were there was a family member that stepped in to help them, you know, with that basic need. And so those are the two issues that we found with clients being declined. And for the ones that withdrew, you know, some are, you know, like Mike said, are sometimes in a crisis mode, you know, and when they’re coming to us during that crisis mode, sometimes they’re not always in it, they know that they need the help. And sometimes they just won’t provide what we need to get them to the finish line. And so that always is a challenge, you know, when a person is in crisis, but I think that for our clients, we have been very successful in getting the ones approved, and even for the ones that have been declined. And if something changes in their situation, they can always come back to us and get re-evaluated for an approval so that that is always open to them. 

Billnitzer, 39:18 

And then the nature of the relationships of the financial institutions with Aesop, if you look at it, we are administering the program if you look, third, Federal Savings and Loan, they are actually backing providing the financial backing for the loans and faith community united credit union is underwriter I’m sorry, servicing the loan. So that’s how I would quickly sum up the relationship between the three. 

Kali, 39:44 

Great, thank you both. Questions from Amanda Wilson. How long does it take for a client to actually receive a loan once they apply and when does the financial counseling happen? 

Smith, 39:55 

Okay, great question. And so typically, we when we get the loan, and we established approval, the turnaround time is very quick because we do understand that the client is in crisis. And so we try to get that payment out to their creditor as quickly as possible. So typically, the turnaround time is, is typically like two to three days, depending on the day of the week. So if it’s a Friday, you have to consider that it is the weekend. But it’s typically a turnaround time of two to three days, because again, we have to do our reviewing and then it then electronically goes over to faith, that then we ask them to prepare the closing docs, they send those closing backpacks to us, the counselor then has to contact the client to sign those closing documents. And then once the closing documents are signed, there a CH is are set up because that is another requirement of the program, the client does have to have or be on a CH automatic withdrawal up out of their account. And then once that following month is when the counseling session starts to happen. 

Kali, 41:05 

Great, thanks, internet. Living it’s just a couple questions. Can we talk a little bit about how third federal got involved and any advice that you might have for others who want to sort of develop a similar relationship toward a similar outcome? How would they go about doing that? 

Billnitzer, 41:23 

Sure. So I think, again, trust is important. One of the things that we’ve seen in the data, lower percentage, but we’ve seen people withdraw because they don’t trust institutions. And we know that through our work in the community, I’m sure most people on this call, recognize that as well. So I think you need to turn to an institution where you have a history and a trusted history and know their values. So the first that’s third Federal Savings and Loan, as I mentioned, was with us to the foreclosure crisis, we didn’t have to do any direct action community organizing to bring them to the table. Faith is a trusted institution in the community. So that’s where I would start where past behaviors the best predictor of future behavior, right, who do you have relationships with. The other piece I would bring up is for banks, this qualifies for CRA credit. And so I would look in your community and know who is really trying to improve their CRA exam scores, and see if they are putting more dollars into the community as they should, regardless of the motive, you know, make it build that relationship and partner to see what you can do together to help improve housing and financial stability in the community. 

Kali 42:37 

That’s a great point, Michael. Thank you. So do you have any sort of sense of the impact of your loan programs or small dollar loan program? And what it’s had sort of on the larger community in terms of the payday loan landscape? 

Billnitzer, 42:56 

It’s a good question. Happy to feel that answer or not. If you want to, Jackie, you want to 

Smith, 43:01 

Let Jackie feel that in because she is definitely tapped into the community? And so I’ll let her answer that. 

Moore, 43:09 

Yes, thank you, if we were saying relationships are key, we started our own payday loan program, because we’re in underserved community. And when we moved in to the community, they were payday loan centers, right right at the corner. And so many of our members were caught into that predatory lending. And once we reached out to say, Hey, we’re gonna combine that debt, do not get another payday loan, when we knew that sometimes impossible. When you’re already sent into the dead, you have to have a month that you don’t do anything to break the cycle. And that’s where we stepped in to say, hey, let’s make our own program aren’t we will give $500 that’s the max for the month, you have 30 days to repay. And we pay the other debt, we brought in like a debt consolidation loan. To in a lot of our members, it’s our best product, one of our best lending products, the members were able to clear up that did not lose homes and cars. And I mean, it’s really a serious cycle. They were actually losing their income. So that we’ve done it for many, many, many years. And it is still a needed product. But payday loans are supposed to be for an emergency. This happened. Let me get the loan and I’m back on track. So many people use payday loans as a part of their income. And that’s when we stepped in with the counseling to say we’re gonna wean you off. But our members, over 5000 members and they don’t all have payday loans, but the group of a community that’s underserved, that need it, we get with them go over their credit reports. Let’s get together. Give you a small dollar long and paid this. We’ve referred our seniors to even Isa go through this program. collaborations are key. I love the building we’re in now was a C. Ra credit from key Bay. They came in, we can’t use the building, but we’ll give it to you $1 a year it to make this work help this community, not one bank in our hair. And that’s what we did. So payday loans are key, they can be addictive, but if handled properly, it will help your client, our member and build your community. The payday loan, that company is closed in our area, we shut it down. 

Kali, 45:54 

Nice, excellent, Let’s see folks feel free to input your questions in the chat. We still got a few more minutes. That is well done that is well done. So can you talk a little bit about you know, sort of thoughts, ideas, tips, how others and other communities, you know, including, you know, outside of Ohio could go about replicating this program? What are some of the optimal conditions? You know, the environment partners that can sort of make this small dollar loan program possible elsewhere? 

Smith, 46:30 

Mike if you want to take that, or, 

Billnitzer, 46:32 

Yeah, I think we’ve touched on some of them already. I think, you know, having trusted relationships in the community, you have to be a trusted entity yourself, first of all, and I think with Aesop’s history and reputation nationally, statewide locally, you have to have the trust of the community. And so that’s important. So it has to start with a trusted organization. Because word of mouth by far is the biggest outreach mechanism for a program like this. Early on, when we were trying to outreach through different groups, you know, that’s, you can’t always bank on that through partner organizations to get things out, or will people see it in the media, word of mouth always gets out if somebody is has a good experience with you as an organization, they’re going to tell nine people, right, they’re going to typically, so that that would be one. I think the other piece that’s important is and it goes to trust and qualifications. Having and having been a HUD approved agency for so long gives you that credibility, that standardization that holds you to being accountable, and then take it a step further, and have every one of your counselors as we do as many as you can on staff be individually HUD certified. So those are some of the things I think you look at local data to see and local trends to see what the impact of payday lending is in your market. But this was in response to a crisis to keep that in. So yeah, I’m sorry. Sorry. I’ll 

Smith, 48:06 

Sorry. I’ll also add to what Mike was saying in terms of knowing what your client needs. Right? And how can you possibly help them, you know, meet that need? And I think if you assess that, you know, and look at as you’re looking at as Mike that the Friends of your clients are like, okay, hey, Mrs. Jones, oh, we had 50% of our clients needed rental assistance, or 50% of our clients needed utility assistance, or they couldn’t, you know, meet basic food needs, or they didn’t have transportation, money for transportation. So the key there is looking at the needs of your clients, and then collaborating and getting with partner agencies to help you help that client meet those needs. 

 Moore, 48:54 

I like to piggyback on answering that, and that is exactly why you have to know your community and clients. Before COVID we would go to any event in the community, we would go to the Urban League, the different festivals in the area, let the people know that we exist and what we can do. When we moved into the community. We actually went door to door to the businesses up and down, you know, in our area to say We’re here. We’re a financial institution. May we come in and speak with your employees. And several of the local businesses said sure they didn’t even know as business owners, the need that their employees had you mentioned cars, we had a program called wheels to work. We got a grant to help members that could not get traditional loans and they were late for work. They couldn’t they could not get loans or do anything for work. We got a grant to back them getting a car loan, not a brand new But it got them from A to B, they were. So they had hope they were just overjoyed that someone believed enough into them and to help them. And even some of the business owners, like their federal, the business owners even said, you know, what we’ll do, we will back are employees, they had enough faith in their employee, that they were guaranteed a part of the month. So it’s things like that coming together, finding out the need, and then how can we make the need work and pull different pieces of it together, Aesop, a third federal, a faith community, you know, an Urban League, and we all come to the table to say, Oh, we need all of us to make this happen for a certain group of people, marketing, I mean, and it’s word of mouth, we have to talk, we have to communicate and collaborate. 

Kali, 50:57 

Yeah, that’s great. Thank you, you know, I do get a chance to communicate work with a number of NCRC members in the senior space. And I will say that what I do find out of those that tend to have what seemed to me to be relatively, you know, pretty successful programs, it really does come down, I think, to that relationship that they may have within the community, but also it the word of mouth, it’s knowing that you’re serving X number of older adults, and those older adults had such a great positive experience that they’re then telling other friends and members and family members in the community and that sort of expect to that organization. And that’s, that’s, it’s interesting to me that that really is sort of the foundation, I think, for a lot of success for a lot of innovations. Yeah, definitely. So lemon has a really great question. I might tack on to this question a bit as well. Her question is, what’s the plan after this pilot? Will you all be looking at expanding and scaling up the program and then tap off to that and just say, what’s the future? Where do you sort of envision this program being, let’s say, like, five years from now? Great, 

Billnitzer, 52:01 

Great question. So I think right now, as I said, throughout the presentation, our goal is to take people from crisis to capable and right now we’re still in a crisis. But I would say one goal is to get the people that we have. A capable second goal would be to have this recognized as an alternative to payday lending, right. And I think a third goal would be to as this grows, and we hopefully the performing loans, percentage will continue the way it is. And I think we have a process that helps establish that. But as we continue to grow this to provide other wraparound services, so for example, this type of program, it’s a gateway in for older adults, one of the things that we’ve realized this year, and it’s a different program that we’re running is older adults have, they were victims of the digital divide. So we are also in a separate program, trying to provide PC training for older adults, internet connectivity, if the older adult completes the PC training, we will connect them to the internet. And we will couple that with financial education workshops and counseling. And they get to keep the PC and internet connectivity for a year to help reduce socialized isolation, improve financial outcomes, and give them financial or PC acumen. So I think using something like this as a, an entry point for other services that help older adults improved the financial and housing quality of their lives is the way that we are looking at this but the primary one I would point out as we start to look at data is how do we make this an alternative to credit to payday lending? So I would say to Antoinette, Jackie, Jacqueline, I would love to hear yours. Yes.  

Smith, 53:53 

Yeah. I mean, I think you hit on it, you know, I’m just, you know, eloquently, Mike and so for us, you know, having like Jackie was talking about the word of mouth. And so I’ll just say that, you know, in our wraparound services, we had a client. And so we did assessment, we assessed her whole financial situation. And you know, she was one of, you know, our clients of the loan client, and she came back with a $10 donation to our organization. Now, it may not sound like a lot, but can you imagine if everyone in our program who was so grateful that someone gave them a second chance to be able to get financially stable, you know, gives because they’re so grateful. That’s what we want to do. That’s what the program is designed to do to really empower people to feel the need, like I am not hopeless, right? Someone believed in me and I can do this, right. And so that is the messaging. And so as we do that, we want to expand it out more right to more people, maybe you know, to different counties, you know, to get more funders on board to, you know, up the increase of the amount that they’re able to loan you know, so it can go in all different types of directions, we would like it to go in all of those directions, so that we can help and serve many, many more people. 

Moore, 55:11 

Yes, I agree, I think we’re all saying the same thing, the program definitely should be expanded to not only include seniors, we definitely look out for the well being of our seniors, we have seen your fraud, we had a gentleman come up in a camp with one of our senior members to withdraw money out of her account, we sat around the lobby, call the police, you know, we, we have to do, and the police went right to his cab, and you know, took care of that situation. You know, we’re each other’s keepers. And our youth, we do the same thing we have so many parents come in, I gave my kid the credit card to leave for college, we have a card just for college students with caps on, you know, to try to help, you know, keep the parents like, Oh, my God, I have an extra expense. You know, expand, my daughter took a $10,000 trip or spring break, you know, these things really happen. But I think the overall financial wellness and health of our whole community, it involves the youth, the elderly, and those that have the half knots, all of us to make the program work. We have one member that started on our payday loan program, went and needed the wheels for work program. And our third part of our grant was mercy mortgage, that individual did not qualify for mortgage loan, but partnering with third federal, and others to help us. She is now a homeowner through the mercy mortgage program. So it goes full circle to see someone there to where they are today working and you know, and they give back until others and a one member even moved out of town but still has a direct deposit, come to faith. Don’t have you don’t even have to have an account. But I support your mission, what you all are doing. And COVID just even let us know even more how we’re needed. We received grant fundings, we had members donate funds and toys for kids. And we too did the computer program. So it’s just full circle. You really see it. It’s neat, and I hope that we can get what he saw. And of course, always look out for our seniors, but do even more for the whole community. 

Kali, 57:37 

Definitely. Thank you, Jacqueline. Thank you, all of you here. We unfortunately sort of up to the last minute, minute or two of our session. So I just want to say thank you all so much. Thank you to our speakers. Thank you to our audience for spending this Friday afternoon, Friday with us. Please feel free to connect with all of us using associate platform just search for our names and hit Connect. We’d be happy to chat further. If you missed the sessions, the previous session that comprise the H really bacon convening. Please check the platform for recordings. I imagine they’ll be there today but maybe tomorrow. Thank you again to everyone and hope you continue to enjoy the conference this afternoon and into next week. 

Billnitzer, 58:19 

Thanks a lot, everyone. Bye 

Kali, 58:22 


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