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Raise Texas

Action Campaigns

Alternative Small Dollar Consumer Loan Products and Policies

Since 2009 RAISE Texas has been actively involved in researching and assisting the growth of small dollar loan alternatives to high cost payday and auto-title loans in Texas. In 2011, after the completion of our RAISE Texas Summit, we sponsored a convening of local, state and national partners and players to look at potential new opportunities to expand our work. One of the intriguing alternatives presented was the newly created employer-based small dollar loan product from the CDC of Brownsville. Over the last seven years RAISE Texas has been part of the advisory board providing technical support and assistance to grow the employer-based program. Beyond the Brownsville and Rio Grande Valley, which is serviced under the Brownsville group, the Community Loan Center (CLC) of Texas was created to serve other parts of Texas and more recently other states.

One of the first funders that believed in the CLC was Citi. They had the vision to provide major seed capital to help move this from Brownsville to launch it in communities across Texas. Click here to see the video on the exciting work of the CLC of America.

Product Action Steps

Current Products

  • Propose a reasonably structured and priced payday and auto title loan alternative to the industry for consideration.
  • Propose that CSOs clearly disclose a purported policy to negotiate a longer-term amortizing loan term for those customers that are unable to pay their loan back in two weeks.
  • Promote SHARE loans currently being offered as viable alternatives to high-cost consumer loans. This action step will involve research of existing programs and then matching these programs to community organizations/agencies working directly with clients who need short-term loans.
  • Longer-term objective: Use the results of the FDIC Small Dollar Loan Pilot Program to determine successful mainstream bank models (best practices) and promote their use to Texas banks and credit unions.

Potential Products

  • Support the efforts of the Texas Credit Union League’s REAL Solutions payday loan product that will launch in early 2010. Encourage participation by local credit unions throughout the state and help market each program offered.
  • Support the efforts of local programs to create alternatives to high-cost small dollar loans and explore a state-wide program based on successful models.
  • Connect community-based organizations to local financial institutions willing to offer small dollar loans to their clients.
  • Work with the “Bank on” campaigns and financial coaching models to promote viable options for families that need it most.

Policy Action Steps

  • Continue to promote fair small dollar lending standards.
  • Continue to promote data reporting requirements for Credit Services Organizations.

Our goal, coming out of each summit, is to develop a concrete and achievable strategy to build on the momentum of the previous year. We will strive to create meaningful growth in the loan options available to families. We will also push ahead on the path towards regulatory and legal reforms of an industry that has too long been subsidized by the lack of accountability under Texas law.

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