Brightpoint (formerly Community Action of Northeast Indiana or CANI) announced today that is has received nearly $1 million in funding from JPMorgan Chase & Co. to expand its consumer loan program. Brightpoint received this award as part of a $5.1 million grant to the Community Loan Center Coalition of Texas and Indiana.
“The purpose of this grant is to invest in an employer-based, small-dollar loan program that will provide an alternative to payday lending,” reported Brightpoint President/CEO Steve Hoffman. “Thanks to the generous funding from JPMorgan Chase, Brightpoint will be able to help keep more dollars in the pockets of families in our community.”
In Indiana, payday lenders cost consumers over $70 million in fees annually. On an average 14-day loan, payday lenders charge 365% APR. About 7% of low-income families in northeast Indiana utilize payday lenders regularly. But it is not just low-income households who are using these services. According to the Consumer Financial Protection Bureau, the median income of payday borrowers is $22,476, but a quarter of all borrowers make $33,876 or more.
“The challenges facing our communities require solutions tailored to their specific needs,” said Jim Cook, division manager for Chase’s Commercial Bank. “Brightpoint is developing innovative strategies for the needs of Fort Wayne area families that will connect them to greater economic opportunities and prosperity.”
The Community Loan Center was developed in Texas and is now expanding into Indiana. The Indiana Association for Community Economic Development (IACED) will act as the statewide coordinator for the Community Loan Center franchising in Indiana. Brightpoint will serve northeast Indiana while HomesteadCS will serve the Lafayette market.
Community Loan Centers offer affordable loans to consumers while allowing employers an opportunity to offer a valuable employee benefit. Employers pay no direct cost to provide this benefit to their employees and it can increase productivity by reducing employee financial stress and increasing workplace morale.
The Community Loan Center at Brightpoint will offer a low-cost loan product with an affordable payback plan that is payroll deducted allowing employees to overcome their financial emergencies. Another benefit of the program is that activity on the loan will be reported to credit bureaus (something payday lenders don’t do) helping to build the credit score of the borrower.
Many times payday loans are used for such things as medical emergencies, car repairs, or to catch up on bills. While providing low-cost consumer loans for these needs, Brightpoint will also connect borrowers to the other services the agency provides such as help enrolling in health insurance, assistance with utility and child care costs, and connecting them with other resources in the community.
“We are excited to begin offering this new service that will help alleviate financial stress for more families and create a brighter future for our community,” concluded Mr. Hoffman. The Consumer Loan Center at Brightpoint is scheduled to begin making loans in January 2016.