CU Community Credit Union launching low-income lending alternative

With help from federal grant dollars, CU Community Credit Union announced yesterday plans to roll out an alternative to traditional payday loans.

The move is expected to help those stuck in the payday loan debt cycle, according to city of Springfield officials. In the Queen City, roughly 26 percent of the population lives at or below the federal poverty levels, leading the Federal Reserve to classify the community as in “severe fiscal distress,” according to a news release from the city of Springfield.

"There are many people in Greene and Christian counties who are drowning in debt, and they turn to other costly solutions to solve short-term liquidity problems," CU Community Credit Union President and CEO Judy Hadsall said in the release. “Our hope is that we can help fill in the gaps where other financial products haven’t been able to provide assistance and create a lasting impact for people’s financial well-being."

CU Community will utilize nearly $2 million in grant funding from the U.S. Treasury to create the Fresh Start Loan Program.

“Our Fresh Start Loan Program provides members access to small, short-term loans with reasonable rates and fees,” Hadsall said in the release. “Our financial specialists will work with members to determine if this product is the right fit for their situation and to help them consolidate their existing payday loans so that they get out of the debt cycle faster.”

The 11,000-member, $100 million asset firm in 2016 plans to launch the payday loan alternative, which also includes a credit builder loan program, payday consolidation loan and title loan alternative.

According to the Missouri Division of Finance, roughly 2 million payday loans were taken out in Missouri from October 2013 to September 2014. The average amount borrowed was nearly $310 with an average annual percentage rate of around 452 percent. Customers can roll over the payday loans six times, adding additional fees, according to the release.

The credit union is working with the city and several nonprofits - including Community Foundation of the Ozarks, Community Partnership of the Ozarks, Consumer Credit Counseling Services, Council of Churches of the Ozarks, Faith Voices for Southwest Missouri and the Ozarks Area Community Action Corp. - to battle poverty through the loan program.