AEI and NHS of Baltimore Launch Borrow and Save Program (small loans for East Baltimore Residents)

Baltimore, MD.

In an attempt to battle the use of so-called “Pay Day Loans” and “Cash Advances” in low income neighborhoods, the Baltimore Alliance for Economic Inclusion (BAEI) and member nonprofit Neighborhood Housing Services of Baltimore, Inc. (NHS) announced a new pilot loan program on September 24, 2009 during a press event.

The press event was hosted by NHS on Park Avenue in Baltimore and included Robert W. Mooney, Deputy Director, Consumer Protection and Community Affairs, Division of Supervisor and Consumer Protection, Federal Deposit Insurance Corporation (FDIC); Maryland Commissioner for Financial Regulation Sarah Bloom Raskin; Baltimore City Council President Stephanie Rawlings-Blake, Baltimore City Housing Commissioner Paul Graziano, and other dignitaries, as well as members of BAEI.

The Borrow and Save Loan Program is a pilot program designed to help low-income families and individuals break the continuous cycle of borrowing from “payday loan”, “check cashing” or “cash advance” vendors, many of whom charge as much as 26% interest for clients in need of “fast cash”.

The most recent research conducted by NHS of Baltimore in 2008 shows the ratio of traditional banking institutions to check cashing and pay day lending centers varies greatly by neighborhood in Baltimore depending on the area median income (AMI). The study shows some disturbing trends:

• Neighborhoods with AMI of $60,000 and above have 1.6 times more traditional bank and credit union storefronts per population than neighborhoods with AMI of $30,000 or below
• Check cashing centers are 5x more prevalent in those same low income neighborhoods than in the higher income neighborhoods

BAEI and NHS of Baltimore see a clear correlation between household income and the use of check cashing centers for banking needs, instead of safer, traditional banking institutions. Individuals and families who are traditionally banked are typically more financially stable and solvent with a better understanding of budgeting and saving.
To qualify for the program, individuals must be:
• A resident of the East Baltimore area- zip codes include: 21202, 21205, 21213, 21224, and 21231
• Have some form of steady income (i.e. job, unemployment, disability, etc.)
Participants will have the opportunity to borrow from $300 up to $1,000 and will be allowed to pay the loan back over the course of one year.

How to obtain a Borrow and Save Loan:
• Loans may be obtained by qualified individuals through Neighborhood Housing Services of Baltimore, Inc. at 819 Park Avenue, Baltimore, MD 21201
• Loan participants are required to participate in one-on-one counseling and financial fitness education to learn about saving, budgeting and using traditional banking institutions.
• Eligibility and payment cycles for each participant will be determined and monitored by one of NHS of Baltimore’s trained, not-for-profit loan officers
• To help break the cycle of loans/cash advances, participants have the opportunity to open a savings account to which NHS of Baltimore will match $5 dollars every month of what they save, as an added bonus and extra incentive to save

To apply for the Borrow and Save Loan today, please call 410-327-1200.
To read other articles about the program click these links. Baltimore Sun, Baltimore Business Journal